XYZ Company, Balance Sheet for 12/31/2012 and 12/31/2013. 2012 2013 Cash $15,000 $14,000 Marketable Securities 6,000 6,200 Accounts Receivable 42,000 33,000 XYZ Company, Income Statement for the Year Ended 12/31/2013 Inventory Prepaid Rent 51,000 1,200 84,000 1,100 Sales (all credit) Less: Cost Of Goods Sold Gross Profit $600,000 460,000 140,000 Total Current Assets 115,200 138,300 Less Operating & Interest Expenses General & Administrative Interest Gross Plant & Equipment 346,000 360,000 30,000 10,000 30,000 Accumulated Depreciation -60,000 -90,000 Total Assets 401,200 408,300 Depreciation Total 70,000 70,000 27,100 Accounts Payable 48,000 57,000 Earnings Before taxes Less: Taxes Net Income Available to Common Stockholders Less: cash Dividends Notes Payable 15,000 13,000 42,900 Accruals 6,000 5,000 31,800 11,100 Total Current Liabilities 69,000 75,000 Change in Retained Earnings Long Term Debt 160,000 150,000 Common Stockholders Equity 172,200 183,300 Total Liabilities & Equity 401,200 408,300
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.
Make a Summary of USES and SOURCES of Cash, then make a
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