Question 1 The following trial balance has been extracted from the ledger of Azwin, a sole trader as at 31 May 2019, the end of her most recent financial year. Property, at cost Equipment, at cost Accumulated depreciation (as at 1 June 2018) Property Equipment Inventories as at 1 June 2018 Purchases Sales revenue Discount allowed Discount received Wages and salaries Bad debts Loan interest Carriage outwards Other operating expenses Trade receivables Trade payables Provision Cash Bank Overdraft Drawings 13% long-term loan Capital Debit(RM) 90,000 57,500 27,400 259,600 3,370 52,360 1,720 1,560 5.310 38,800 46,200 151 28.930 612.901 Credit(RM) 12,500 32,500 405,000 The following additional information as at 31 May 2019 is available: i. Inventories as at the close of business were valued at RM25,900. ii. Expenses included under this heading are accrued by RM200. RM140 accrues wages and salaries. 4,420 33,600 280 14,500 12,000 98,101 612.901 Required: a) Prepare a Statement of Profit or Loss for the year ended 31 May 2019. b) Prepare a Statement of Financial Position (Balance Sheet) as at 31 May 2019.
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.
Step by step
Solved in 4 steps
