Statement of Cash Flows-Indirect Method The income statement for Nebula Company for 2017 is as follows: For the Year Ended December 31, 2017 Sales revenue Cost of goods sold Gross profit Operating expenses Loss before interest and taxes Interest expense Net loss Presented here are comparative balance sheets: Cash Accounts receivable Inventory Prepayments Total current assets Land Plant and equipment Accumulated depreciation Total long-term assets Total assets Accounts payable Other accrued liabilities Interest payable Total current liabilities Long-term bank loan payable Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $500.000 400.000 $100.000 180,000 $(80,000) 26.000 $(106,000) December 31 2017 $95.000 50.000 100,000 55.000 $300.000 $475.000 870.000 (370.000) $975.000 $1.275.000 $125.000 35.000 15.000 $175.000 $340,000 $450.000 310.000 $760.000 $1.275.000 2016 $80.000 75.000 150.000 45.000 $350.00 $400.000 800.000 (300.000) $900.000 $1.250.000 $100.000 45.000 10.000 $155.000 $250,000 $400.000 445.000 $845.000 $1.250.000 Other information is as follows: a. Dividends of $29.000 were declared and paid during the year b. Operating expenses include $70.000 of depreciation. c. Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans. The president has asked you some questions about the year's results. He is disturbed with the $106.000 net loss for the year. He notes, however that the cash position at the end of the year is improved. He is confused about what appear to be conflicting signals: "How could we have possibly added to our bank accounts during such a t year of operations?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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