Which one of the following alternatives represents the correct amount that must be disclosed as inventories in the statement of financial position of VV Traders for the year ended 30 June 20.2? A. 66 030 B. 48 600 C. 56 080 D. 60 840 E. 57 150 F. 52 690
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.
![QUESTION 2
Which one of the following alternatives represents the correct amount that must be
disclosed as inventories in the statement of financial position of VV Traders for the
year ended 30 June 20.2?
A. 66 030
B. 48 600
C. 56 080
D. 60 840
E. 57 150
F. 52 690](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d066935-fb05-42ac-a3cc-8581e0fc5b07%2Fafa1e91e-f1d5-4a72-a44a-f2379bfc08e9%2F80klh7p_processed.jpeg&w=3840&q=75)
![Vusi and Vuma are in partnership trading as VV Traders specialising in
manufacturing protective wear related to COVID-19. The partners share profits
equally. The following information pertains to the business activities of the
partnership for the year ended 30 June 20.2:
VV TRADERS
EXTRACT OF FINANCIAL INFORMATION AS AT 30 JUNE 20.2
Note
R
Loan to Vusi
Land and buildings (at cost)
Machinery (at cost)
Vehicles (at cost)
Accumulated depreciation: Machinery
Accumulated depreciation: Vehicles
Allowance for credit losses
Capital contribution: Vusi
Capital contribution: Vuma
Allowance for settlement discount granted
Long-term loan
Inventory
Trade receivables control
Trade payables control
Bank
Petty cash
Current account: Vusi (1 July 20.1)
Current account: Vuma (1 July 20.1)
92 650
462 330
160 690
Cell Styles
201 580
29 220
9 810
3 710
350 280
350 280
8 940
70 850
49 490
97 450
41 530
84 590
1 570
42 840
63 220
Profit before year-end adjustments
170 370
Additional information
1. The long-term loan was acquired from Gqeberha Bank on 1 July 20.1. The
capital portion of the loan is repayable in annual installments of R10 000
and the first installment is payable on 31 December 20.2.
2. On 1 July 20.2 VV Traders received an invoice amounting to R3 200 for
delivery expenses of inventory delivered on 25 June 20.2.
3. On 1 January 20.2 VV Traders made a loan advance to Vusi. According to
the loan agreement, the loan bears interest at 10% per annum and is
capitalized. The interest is not yet recorded. The loan is fully repayable on
31 January 20.3.
4. Depreciation for the year is to be provided for as follows:
• Machinery - R8 800
o Vehicles - R18 500
5. On 1 January 20.2, VV Traders concluded an insurance contract with
Namba Insurers. According to the contract, the premium is payable annually
in advance. The amount paid on the same date amounted to R18 000 and
must still be recorded.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d066935-fb05-42ac-a3cc-8581e0fc5b07%2Fafa1e91e-f1d5-4a72-a44a-f2379bfc08e9%2Fe32pozq_processed.jpeg&w=3840&q=75)
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