The following selected accounts from Crane Corporation's general ledger are for the year ended December 31, 2025. Accounts receivable Accumulated depreciation-equipment Advertising expense Common stock Cost of goods sold Depreciation expense Dividends Equipment Freight-out Income tax expense Insurance expense Interest expense Interest revenue Sales Revenue Inventory Prepaid expenses Rent revenue Retained earnings Salaries and wages expense Sales revenue Unearned sales revenue Cost of Goods Sold Gross Profit Operating Expenses Salaries and Wages Expense Insurance Expense Depreciation Expense Freight Out Advertising Expense Total Operating Expenses Other Revenue and Gaine interest Reve eight-Out Income From Operations V Other Expenses dvertising Expense Total Operating Expenses come From Operations V Other Revenue and Gains Rent Revenue Interest Revenue Other Expenses and Losses Interest Expense Expenses Income Tax Expe v Net Income/Low V v v $256,000 768,000 54,500 270,000 1,166.000 133.000 149,000 1,430,000 25,900 70.500 23,700 41.300 30,000 96.500 31.200 24.900 549.000 706.000 2.509,000 20,000 CRANE CORPORATION Income Statement Year Ended December 31, 2025 2000 30000 24900 30000 706000 23700 133000 25900 54500 $4900 133000 25900 i 54500 i $4900 61300 4004 E
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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