The following financial statements information is available from ST Group of companies: Consolidated Income Statement for year ended 31 December, 2021 $'000 Turnover 45,614 (20,130) Cost of Sales Gross Profit Distribution Costs Administration and Other Expenses Operating Profit Interest 25,484 (4,503) (7,526) 13,455 (306) Profit before taxation Taxation 13,149 (1,089) NET PROFIT 12,060 Conselidated Balance Sheet as at: 31 December 2021 31 December 2020 S'000 $'000 Non-Current Assets Preperty, Plant and Equipment Current Assets 21,196 15,780 Inventeries 5,904 6,997 Receivables 5,7 4,044 Cash and Cash Equivalents 2.981 2,204 14,681 13,245 Total Assets 35,877 29,025 Current Liabilities Accounts Payables 5.531 6,637 Taxation Payable 1.659 1.142 7,190 7,779 Non-Current Liabilities Bonds Payable Stockholders' Equity Share Capital 3,003 4,664 12,596 12,596 Retained Earnings 13,088 3.986 25,684 16.582 35,877 29.025 Additional Information: There was no gain er less en the sales of fixed assets, nor en the bends retired. ii. Depreciation i. included in Distribution cost amounted to $1,059,000 ii. Old equipment was seld for $881,000 cash and new equipment was purchased for $7,356,000 cash. iv. Cash dividends of $2,958,000 were paid. U. Old bends were retired, while no new bonds er shares was issued. Required: A. Prepare a complete Conselidated Statement of Cash Flows for the ST Group for the year ended 31 December 2021 using the Indirect Method.
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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