Suresh Company reports the following segment (department) income results for the year. Sales Expenses Department M $ 68,000 Department N $ 38,000 Department 0 $ 65,000 Department P $ 47,000 Department T $ 33,000 Total $ 251,000 Avoidable Unavoidable Total expenses Income (loss) 12,300 53,800 66,100 39,400 15,600 55,000 23,900 4,700 28,600 16,500 36,400 42,300 134,400 13,300 123,800 52,900 55,600 258,200 $ 1,900 $ (17,000) $ 36,400 $ (5,900) $ (22,600) $ (7,200) b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated. Total increase in income $ 3,700
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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Suresh Company reports the following segment (department) income results for the year.
Sales
Department M
$ 68,000
Department N
$ 38,000
Department 0
$ 65,000
Department P
$ 47,000
Department T
$ 33,000
Total
$ 251,000
Expenses
Avoidable
12,300
Unavoidable
Total expenses
Income (loss)
53,800
66,100
39,400
15,600
55,000
23,900
4,700
28,600
16,500
36,400
42,300
13,300
134,400
123,800
52,900
55,600
258,200
$ 1,900
$ (17,000)
$ 36,400
$ (5,900)
$ (22,600)
$ (7,200)
b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated.
Total increase in income
$
3,700](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F23ea44ae-445d-4c1c-99c4-40555d9db3cb%2Fea946a7f-2526-4502-b889-40dd72455850%2Fujqr0tc_processed.png&w=3840&q=75)
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