Tani Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending Balance Beginning Balance Assets: Current assets: Cash and cash equivalents $ 52 $ 40 Accounts receivable 37 32 Inventory 57 63 Total current assets 146 135 Property, plant, and equipment 515 470 Less accumulated depreciation 312 270 Net property, plant, and equipment 203 200 Total assets $ 349 $ 335 Liabilities and stockholders' equity: Current liabilities: Accounts payable $ 54 $ 46 Total current liabilities 54 46 Bonds payable 60 70 Total liabilities 114 116 Stockholders’ equity: Common stock 52 50 Retained earnings 183 169 Total stockholders’ equity 235 219 Total liabilities and stockholders' equity $ 349 $ 335 The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. The net cash provided by (used in) investing activities for the year was: Multiple Choice ($45) $45 ($3) $3
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.
Tani Corporation's most recent
| Comparative Balance Sheet | ||
| Ending Balance | Beginning Balance | |
|---|---|---|
| Assets: | ||
| Current assets: | ||
| Cash and cash equivalents | $ 52 | $ 40 |
| 37 | 32 | |
| Inventory | 57 | 63 |
| Total current assets | 146 | 135 |
| Property, plant, and equipment | 515 | 470 |
| Less |
312 | 270 |
| Net property, plant, and equipment | 203 | 200 |
| Total assets | $ 349 | $ 335 |
| Liabilities and |
||
| Current liabilities: | ||
| Accounts payable | $ 54 | $ 46 |
| Total current liabilities | 54 | 46 |
| Bonds payable | 60 | 70 |
| Total liabilities | 114 | 116 |
| Stockholders’ equity: | ||
| Common stock | 52 | 50 |
| 183 | 169 | |
| Total stockholders’ equity | 235 | 219 |
| Total liabilities and stockholders' equity | $ 349 | $ 335 |
The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. The net cash provided by (used in) investing activities for the year was:
-
($45)
-
$45
-
($3)
-
$3
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