The following financial information was summarized from the accounting records of Train Corporation for the current year ended December Rails Locomotive Corporate Division Division Total Cost of goods sold $45,700 $28,800 Direct operating expenses 27,600 22,800 Sales 94,100 68,700 Interest expense $2,600 General overhead 19,700 Income tax 4,400 The gross profit for the Rails Division is Oa. $20,800 Ob. $94,100 Oc. $48,400 Od. $66,500
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.
![Use this information for Train Corporation to answer the question that follow.
The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 3
Rails
Locomotive
Согporate
Division
Division
Total
Cost of goods sold
$45,700
$28,800
Direct operating expenses
27,600
22,800
Sales
94,100
68,700
Interest expense
$2,600
General overhead
19,700
Income tax
4,400
The gross profit for the Rails Division is
Oa. $20,800
Ob. $94,100
Oc. $48,400
Od. S66,500
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