TOPS IN TOPIARY - BALANCE SHEET AS OF MAY 31 ASSETS Current Assets: Cash Accounts Receivable Prepaid Rent Prepaid Advertising Supplies Equipment Total Assets $1,380 $1,500 $ 500 $ 500 $ 100 During June the following transactions occurred: $360 $4,340 LIABILITES AND OWNER'S EQUITY Current Liabilities: Accounts Payable Advertising Payable Advances from Customers Owner's Equity Total Liabilities & OE $ 300 $ 500 $ 200 $3,340 $4,340 1) Completed a job for which the customer paid $200 in June. The invoice is for $1,000. 2) Hire a helper and paid $200 for works done. 3) Paid $500 for the rent of July. 4) Purchased supplies for $300. At the end of June notices that there are $200 of supplies left. 5) Orders new flyers for advertising. They will be ready in July but the printer asked to be paid in advance $100. 6) In June collected in cash $3,000 for 3 jobs done for a total of $4,200, the rest is owed in account by the customers. 7) In June decided to start depreciating the equipment bought for $360 that is expected to last for 3 years. Prepare "T" Accounts in CASH Basis for the period ended on June 30th and then answer the questions (proof of cash).
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.
At the end of the accounting period (June 30th), what is the total of current assets?
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More than $3,000
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Less than $1,000
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Between $2,000 and $3,000
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Between $1,000 and $1,499
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Between $1,500 and $1,999
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