The following trial balance was extracted from the ledger of Juliana at 31 December 2020. Juliana Trial Balance as at 31 December 2020 RM RM Land at cost 26,000 83,000 Plant at cost Accumulated Depreciation at 1 January 2020- Plant Office Equipment Accumulated Depreciation at 1 January 2020 Office Equipment Receivables 13,000 33,000 8,000 198,000 Payables 52,000 763,000 Sales Purchases 516,000 Retums inwards Discount allowed Capital at 1 January 2020 Drawings Provision for doubtful debts at 1 January 2020 Salaries Expense Administration costs | 47,000 | 4,000 230,000 14,000 23,000 44,000 38,000 Bank 75,000 Bad debts written off 77,000 84,000 | 1,164,000 Inventory at 1 January 2020 1,164,000 Additional information: • Cosing inventory is RM74,000. • Depreciation on plant is charged at 10% per annum on cost. Depreciation on office equipment is charged at 20% per annum using the reducing balance method. • Administration costs include insurance prepaid of RM3,000. • Salary accrued amount to RM2,000. The allowance for receivables is to remain at RM23,000. Required: a. Prepare Statement of Comprehensive Income for the year ended 31December 2020. b. Prepare Statement of Financial Position as at 31 December 2020.
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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