Make into T accounts Date Account A/c Debit Account A/c Credit Comments 1-Jul Cash $60,000 Common stock $60,000 Deposit for shares 3-Jul Rent expense $3,500 Cash $3,500 Rent paid 5-Jul Prepaid insurance $4,200 Cash $4,200 Insurance paid 7-Jul Supplies $1,000 Accounts payable $1,000 Supplies purchased 10-Jul Salaries expense $3,500 Cash $3,500 Salaries paid 14-Jul Equipment $10,000 Cash & A/c payable $10,000 Equipment purchased 15-Jul Cash $8,000 Tax preparation revenue $8,000 Tax preparation income received 19-Jul Accounts payable $500 Cash $500 A/c payable paid 31-Jul Cash $9,000 Tax preparation revenue $9,000 Tax preparation income received 31-Jul Dividends $600 Cash $600 Dividends paid
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.
Make into T accounts
|
Date |
Account |
A/c Debit |
Account |
A/c Credit |
Comments |
|
1-Jul |
Cash |
$60,000 |
Common stock |
$60,000 |
Deposit for shares |
|
3-Jul |
Rent expense |
$3,500 |
Cash |
$3,500 |
Rent paid |
|
5-Jul |
Prepaid insurance |
$4,200 |
Cash |
$4,200 |
Insurance paid |
|
7-Jul |
Supplies |
$1,000 |
Accounts payable |
$1,000 |
Supplies purchased |
|
10-Jul |
Salaries expense |
$3,500 |
Cash |
$3,500 |
Salaries paid |
|
14-Jul |
Equipment |
$10,000 |
Cash & A/c payable |
$10,000 |
Equipment purchased |
|
15-Jul |
Cash |
$8,000 |
Tax preparation revenue |
$8,000 |
Tax preparation income received |
|
19-Jul |
Accounts payable |
$500 |
Cash |
$500 |
A/c payable paid |
|
31-Jul |
Cash |
$9,000 |
Tax preparation revenue |
$9,000 |
Tax preparation income received |
|
31-Jul |
Dividends |
$600 |
Cash |
$600 |
Dividends paid |
Ledgers or T- Accounts are accounts used to showcase the debits and credits of a particular account
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