Q1. From the following trial balance and the adjustment, data prepare the adjusted trial balance. Particulars Dr. ($) Cr. ($) Cash 7,700 Accounts receivables 19,200 Prepaid Rent 2,400 Supplies 1,300 Equipment 19,900 Accumulated depreciation 4,300 Accounts Payable 3,600 Salary Payable Unearned service revenue 2,600 Common stock 17,000 Retained earnings 22,500 Dividends 9,500 Service revenue 15,400 Salary expense 3,500 Rent expense Depreciation expense Advertising expense 1,900 Supplies expense Total 65,400 65,400 Adjustment data at December 31st is as follow: Unearned service revenue still unearned $ 1,100 Prepaid rent still in force $ 500 Depreciation for the month $ 900 Supplies used during the month $ 600 Salary outstanding $ 1,100 Advertisement expenses outstanding $ 900
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.
Q1. From the following
|
Particulars |
Dr. ($) |
Cr. ($) |
|
Cash |
7,700 |
|
|
|
19,200 |
|
|
Prepaid Rent |
2,400 |
|
|
Supplies |
1,300 |
|
|
Equipment |
19,900 |
|
|
|
|
4,300 |
|
Accounts Payable |
|
3,600 |
|
Salary Payable |
|
|
|
Unearned service revenue |
|
2,600 |
|
Common stock |
|
17,000 |
|
|
|
22,500 |
|
Dividends |
9,500 |
|
|
Service revenue |
|
15,400 |
|
Salary expense |
3,500 |
|
|
Rent expense |
|
|
|
Depreciation expense |
|
|
|
Advertising expense |
1,900 |
|
|
Supplies expense |
|
|
|
Total |
65,400 |
65,400 |
Adjustment data at December 31st is as follow:
- Unearned service revenue still unearned $ 1,100
- Prepaid rent still in force $ 500
- Depreciation for the month $ 900
- Supplies used during the month $ 600
- Salary outstanding $ 1,100
- Advertisement expenses outstanding $ 900
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