PlantTito Company provided the following information during the current year: Cash balance, Jan 1 P1,250,000 Cash received from customers 2,000,000 Interest paid on long term debt 75,000 Income taxes paid 50,000 Cash paid to suppliers 1,500,000 Proceeds from sale of long term investments 500,000 Gain from sale of long term investments 150,000 Cash paid for land 750,000 Cash received for dividends 100,000 Proceeds from issuance of share capital 1,100,000 Cash paid for dividends 100,000 Cash paid to employees 300,000 Cash received for interest 75,000 Gain on sale of treasury shares 75,000 Depreciation expense 200,000
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.
PlantTito Company provided the following information during the current year:
Cash balance, Jan 1 P1,250,000
Cash received from customers 2,000,000
Interest paid on long term debt 75,000
Income taxes paid 50,000
Cash paid to suppliers 1,500,000
Proceeds from sale of long term investments 500,000
Gain from sale of long term investments 150,000
Cash paid for land 750,000
Cash received for dividends 100,000
Proceeds from issuance of share capital 1,100,000
Cash paid for dividends 100,000
Cash paid to employees 300,000
Cash received for interest 75,000
Gain on sale of treasury shares 75,000
Depreciation expense 200,000
18. What is the net cash provided/used by operating activities?
a. P250,000
b. P600,000
c. P625,000
d. P275,000
19. What is the net cash provided/used by investing activities?
a. P1,250,000
b. P650,000
c. (P100,000)
d. (P250,000)
20. What is the net cash provided/used by operating activities?
a. P1,175,000 b. P1,075,000
c. P1,000,000 d. P1,275,000
21. What is the cash balance on December 31?
a. P2,275,000
b. P2,250,000
c. P2,400,000
d. P2,325,000
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