Your review of the ledger of Maliwanag Corporation at December 31, 2020 reveals the following account balances: Accounts due from customer P148,000 Accounts due to suppliers 124,000 Accrued interest on bonds payable 17,000 Sinking fund for bond retirement 30,000 Land for future plant site 350,000 Estimated warranty obligations 60,000 Advances to major suppliers 150,000 Inventories including office supplies of P3,500 221,000 Income taxes owed to BIR 16,000 Allowance fro doubtful accounts 12,000 Metrobank- current account 98,000 Advances to affiliated companies 100,000 The total current assets in Maliwanag’s December 31, 2020 statement of financial position is: P605,000 P585,000 P705,000 P455,000 The total current liabilities in Maliwanag’s December 31, 2020 statement of financial position is: P157,000 P350,000 P217,000 P367,000
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.
Your review of the ledger of Maliwanag Corporation at December 31, 2020 reveals the following account balances:
Accounts due from customer P148,000
Accounts due to suppliers 124,000
Accrued interest on bonds payable 17,000
Sinking fund for bond retirement 30,000
Land for future plant site 350,000
Estimated warranty obligations 60,000
Advances to major suppliers 150,000
Inventories including office supplies of P3,500 221,000
Income taxes owed to BIR 16,000
Allowance fro doubtful accounts 12,000
Metrobank- current account 98,000 Advances to affiliated companies 100,000
- The total current assets in Maliwanag’s December 31, 2020
statement of financial position is:- P605,000 P585,000
- P705,000 P455,000
- The total current liabilities in Maliwanag’s December 31, 2020 statement of financial position is:
- P157,000 P350,000
- P217,000 P367,000
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