Trial balance of Billion Sdn. Bhd. as at 31 December 2023 Sales Purchases Premises (cost) Accumulated depreciation at 1 January 2023_Premises Plant (cost) Accumulated depreciation at 1 January 2023_Plant Wages and salaries Rent expense Opening inventory Capital Drawings Carriage inwards Account receivables and Account payables Bad debts written off Other revenue Cash at bank Bank loan Closing inventory is RM12,500. 4 Debit(RM) You are required to prepare the following for Billion Sdn. Bhd.: a) The journals for adjusting entries of additional information. 99,850 100,000 c) Statement of Financial Position as at 31 December 2023. 18,000 8,900 7,500 5,000 25,000 4,000 27,500 5,000 300,750 Credit (RM) 126,500 b) Statement of Comprehensive Income for the year ended 31 December 2023. 25,000 2,300 Additional information as at 31 December 2023: i. Wages and salaries accrued amount to RM700. ii. Rent prepaid amounts to RM300. iii. Bank loan interest of 10 per cent per annum is outstanding. iv. Provision for doubtful debt for account receivables of 2 per cent is to be made. v. Depreciation is to be charged at 2 per cent of the cost on the premises and 10 per cent of the cost on the plant. 80,000 16,000 2,000 18,950 30,000 300,750
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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