The 31 May 2022 trial Balance of Simon Enterprise is shown below: Simon Enterprise Trial Balance As at 31 May 2022 Account Cash at bank Debtors Supplies Prepaid Insurance Furniture and Equipment Accounts payable Electricity accounts payable Unearned revenue Simon Capital Simon Drawings Service revenue Salary expense Electricity expense Rent expense TOTAL 1 3 6 10 14 The following transactions were completed during June: 20 23 24 Debit ($) 9630 4338 1116 738 23688 26 27 29. 30 14652 15484 860 2124 72630 revenue. Recorded revenue of $16235 in cash and $1245 on account. Paid salaries of $7320. Purchased furniture for $1400 and paid by cheque. Paid creditors $640. Credit($) Withdrew $8000 from business for own use. Purchased insurance policy for $420. Received $1200 from debtors as payment on account. Recorded revenue of $14360 in cash and $2100 on credit. Paid rent for $2450. 882 860 264 28624 42000 Purchased supplies on credit $523. Received $2220 from debtors as payment on account. Paid electricity expense of $860, previously recorded. Performed services for $200 that was previously recorded as unearned 72360
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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