Lamoura Sdn Bhd is a manufacturing companies that produces corporate merchandise. The company had their headquarters and production plant located in the same premises in Hulu Langat. For the year ended 2020, the following balances was extracted from the books of accounts. General and administrative. Marketing cost Interest expense Freehold premises Motor vehicles Machineries 10% Loan from TY Bank Equity Materials as at 1 September 2019 Crystals Marble Work in progress as at 1 September 2019 Freight charges Factory supervisor salary Labour: Semi-skilled Skilled Indirect Loose materials Finished goods as at 1 September 2019 Trade receivables and payables Sales Rental revenue Accumulated depreciation: Freehold premises Motor vehicles Machineries Utilities Insurance Hire of moulding machine Cash and bank RM Debit 52,600 3,400 3,550 225,000 78,200 56,200 32,300 25,800 3,800 560 12,800 12,500 26,200 8,500 4,200 4,100 22,800 8,680 18,720 5,500 15,600 621,010 RM Credit 84,000 44,610 26,400 267,800 21,400 146,000 12,400 18,400 621,010
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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