Love to Learn Company Unadjusted Trial Balance August 31, 2025 Account Title Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accounts Payable Notes Payable Common Stock Dividends Service Revenue Salaries Expense Rent Expense Advertising Expense Total Balance Debit Credit Unadjusted Trial Balance Love to Learn Company Unadjusted Trial Balance August 31, 2025 Account Title Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accounts Payable Notes Payable Common Stock Dividends Service Revenue Salaries Expense Rent Expense Total $ Balance Debit 8,820 5,000 800 800 90,600 3,580 $ Credit 2,900 53,000 54,000 6,000 4,750 400 $ 114,750 $ 115,900 Errors a. Cash is understated by $1,900. b. A $4,900 debit to Accounts Receivable was posted as a credit. c. A $800 purchase of supplies account was neither journalized nor posted. d. Equipment was incorrectly transferred from the ledger as $90,600. It should have been transferred as $82,000. e. Salaries Expense is overstated by $350. f. A $600 cash payment for advertising expense was neither foumal journalized nor posted. g. A $120 cash dividend was incorrectly journalized as $1,200. h. Service Revenue was understated by $4,200. I. A 12-month insurance policy was posted as a $1,300 credit to Prepaid Insurance. Cash was posted correctly. Print Done
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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