REQUIRED: (Round up your answers to the nearest RM) (a) Prepare the necessary adjusting and correcting entries for Muezza Bhd. (b) Prepare a Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020 according to MFRS 101 Presentation of Financial Statement using one statement format. (c) Prepare a Statement of Financial Position as at 30 June 2020 according to MFRS 101 Presentation of Financial Statement. QUESTION 2 Below is a list of account balances at 31 December 2016 of Suria Bhd, a trading company located in Jitra, Kedah. RM Account receivables Accounts payable Accumulated depreciation- buildings Accumulated depreciation- equipment Buildings 91,382 30,780 14,520 4,830 1,143,900 Cash 1,095,220 Cost of goods sold Deferred tax liability 713,460 18,000 420,000 Equipment Gain on revaluation of properties Gain on sale of land Gain on translation of foreign operations Patent Inventory 24,700 91,300 4,900 50,230 459,958 Land 306,444 Maintenance and repair expenses Notes payable Office expense Prepaid insurance Property tax expense Rent revenue Retained earnings 9,960 162,000 11,738 48,000 1,400 48,000 760,600
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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