LIVERS INC. Spreade heet (Work Sheet for statement of Cash Flows For the Year Ended December 31, 20Y3 Balanoe, Deo. 31, DY2 Transactions Balanoe, Debit Cedit Deo. 31, 20Y3 Cah 150,000 155,000 Accounts receivabie (ret) 400,000 450,000 Inentries 750,000 770,000 Inestments 100,000 Land 500,000 Equigment Accum depr. - oquipment Accourts payatle Accrued experespayable Didends payable Comman sock, S4 pa Paidin capisalin ecess of par Retained ernings Tatats 1,200,000 1,400,000 (500.000) (600.000) (300.000) (50,000) (25.000) (340,000) (45,000) (30,000) (600.000) (175,000) (700.000) (200.000) 950.000) Qperating acivses: Net income Depraciaion Gain an sale ofinvetments Inceae in accounts receivatle Inoae in inentaries Ihceszin accounts payatie Decrezz in accrued experses payable Inesing acivies Purchase of equipment Purchase of kand Sade of invetments Financing acivies: Decarafon of cash dvidends Sale df comman stack Ihoeazin dvidends payatie Net change in cash Tatas
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.
List the title of each balance sheet account in the Accounts column.
Step 2.
For each balance sheet account, enter its balance as of December 31, 20Y7, in the first column and its balance as of December 31, 20Y8, in the last column. Place the credit balances in parentheses.
Step 3.
Add the December 31, 20Y7 and 20Y8 column totals, which should total to zero.
Step 4.
Analyze the change during the year in each noncash account to determine its net increase (decrease) and classify the change as affecting
Step 5.
Indicate the effect of the change on cash flows by making entries in the Transactions columns.
Step 6.
After all noncash accounts have been analyzed, enter the net increase (decrease) in cash during the period.
Step 7.
Add the Debit and Credit Transactions columns. The totals should be equal.
Exhibit8.
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