Answered: The whole of financial accounting is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The whole of financial accounting is based upon the very simple idea that, resources supplied by the owner of the business plus liabilities that must be settled at a future date must be equal to the resources in the business. It follows that the capital plus liabilities of the entity must be equal to assets of the entity expressed as: Capital + Liabilities = Assets (i.e. C+L=A).
Using Microsoft excel, demonstrate the effects of the following transactions on the accounting equation, and prepare the resultant balance sheet as at 31st July, 2020,

1 July started business with cash
30,000
2 Sales on cash
50,000
4 Stock of materials paid by cash
10,000
5 Paid cash into bank
20,000
7 Withdrew cash for office use
10,000
8 Loan received by cash
20,000
10 Sales of goods received cheque
30,000
19 Cash sales
80,000
21 Debtor paid us by cash
50,000
30 Sales, received cheque
40,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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