Active Wear Sdn. Bhd. (AWSB) is a sportswear wholesaler located in Bandar Cergas, Bangi. In January 2021, the balances and business activities are as follows: Jan Cash in hand Cash at bank Vehicles 5 10 Trade receivables Trade payables Loan from bank Capital 12 17 RM 36,800 85,200 145,000 23,400 2 Receive cash from the sales to Sneaker Supply for six pairs of sports shoes worth in total RM1,800. 40,400 150,000 100,000 Sold three pairs of tracksuits to Sarah worth in total of RM480 on credit. Purchased two dozen of tracksuits from Casual Sports Trading worth in total of RM2,880 and get the said item on credit for 10 days. Sold sports shoes to Juju and Jaja worth RM600 each on credit. Returned two pairs of tracksuits of RM240 to Casual Sports Trading due to the poor quality. 20 Paid Casual Sports Trading for the full outstanding through cheque payment. 20 Purchased two dozen shoes from Run Trading on credit at the cost of RM4,800. 22 Sold 6 pairs of tracksuits to Smart Company valued RM720 on cash. 23 Smart Company returned a pair of tracksuits worth RM120. 25 Rebecca bought two pairs of sports shoes worth RM500 and paid via cash. 28 Paid a rental for January worth RM3,000 through cheque. Based on the information given above, you are required to enter them up in the Sales Journal, Purchase Journal, Return Inwards, Return Outwards Journal, and General Journal.
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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