The following information was received from the books of Sheetal & Co. for the quarter ending on March 31st, 2009. Particulars Rs. Stock of material on 31-3-2009 70,000 Stock of material on 01-1-2009 1,00,000 8,03,290 Purchase of materials Office Travelling expenses 5,100 Carriage inwards Carriage outwards 4,500 9,150 Drawing office Salaries Depreciation on plant 7,000 8,000 Factory rent, rates and insurance Office rent, rates and insurance Showroom expenses 11,200 29,100 9,000 Productive wages paid Repairs of machine, plant & tools Expenses of Office stationery Travelling Salesmen's salaries and commission Depreciation on office furniture Director's fees 2,27,000 10,000 11,350 9,000 700 8,000 17,900 Factory Fuel, gas and water Manager's salary Income tax paid 18,000 12,000 4,600 5,000 4,000 7,200 Donations Office Expenses Air conditioning charges (office) Labour welfare expenses Outstanding productive wages 33,000 Sales 13,70,000 Prepare cost sheet giving following information, assuming manager devotes 2/3 of his time to factory. i. Material used ii. Prime Cost ii. Works overhead and its percentage on wages
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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