Question 1Puan Zara Is The Owner Of Zara Enterprise (ZE), Which Operates In Ampang, Selangor. The Following Is Zara Enterprise's Trial Balance As Of 31 July 2023.$[ \begin{tabular}{|l|r|r|} \hline & \multicolumn{1}{|c|}{Debit} & Credit \ \hline &
Understanding Trial Balance
A trial balance is a list of all general ledger accounts in a company, along with their debit or credit balances. It is an essential tool for accountants to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance. In this article, we will analyze the trial balance of Zara Enterprise (ZE) as of 31 July 2023.
Zara Enterprise's Trial Balance
| Account | Debit | Credit |
|---|---|---|
| Cash | 100,000 | |
| Accounts Receivable | 50,000 | |
| Inventory | 75,000 | |
| Prepaid Rent | 10,000 | |
| Office Equipment | 20,000 | |
| Accumulated Depreciation | 15,000 | |
| Accounts Payable | 30,000 | |
| Salaries Payable | 10,000 | |
| Unearned Revenue | 5,000 | |
| Common Stock | 150,000 | |
| Retained Earnings | 50,000 | |
| Dividends | 10,000 |
Analysis of Trial Balance
Assets
- Cash: The company has a cash balance of RM 100,000, which is a good starting point for any business.
- Accounts Receivable: The company has a balance of RM 50,000 in accounts receivable, which indicates that customers owe the company money.
- Inventory: The company has a balance of RM 75,000 in inventory, which is a significant amount.
- Prepaid Rent: The company has prepaid RM 10,000 in rent, which is a good practice to reduce future expenses.
- Office Equipment: The company has a balance of RM 20,000 in office equipment, which is a necessary asset for any business.
Liabilities
- Accounts Payable: The company has a balance of RM 30,000 in accounts payable, which indicates that the company owes money to suppliers.
- Salaries Payable: The company has a balance of RM 10,000 in salaries payable, which indicates that the company owes money to employees.
- Unearned Revenue: The company has a balance of RM 5,000 in unearned revenue, which indicates that customers have paid for services or products that have not been delivered yet.
Equity
- Common Stock: The company has a balance of RM 150,000 in common stock, which is the initial investment made by shareholders.
- Retained Earnings: The company has a balance of RM 50,000 in retained earnings, which is the profit earned by the company that has not been distributed to shareholders.
- Dividends: The company has a balance of RM 10,000 in dividends, which is the amount distributed to shareholders.
Conclusion
In conclusion, the trial balance of Zara Enterprise as of 31 July 2023 provides valuable insights into the company's financial position. The company has a good balance of assets, liabilities, and equity. However, there are some areas that require attention, such as the high balance in accounts payable and the low balance in retained earnings. By analyzing the trial balance, accountants can identify areas for improvement and make informed decisions to help the company achieve its goals.
Understanding Balance Sheet
A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It is divided into three main sections: assets, liabilities, and equity. In this article, we will prepare the balance sheet for Zara Enterprise as of 31 July 2023.
Assets
| Account | Debit | Credit |
|---|---|---|
| Cash | 100,000 | |
| Accounts Receivable | 50,000 | |
| Inventory | 75,000 | |
| Prepaid Rent | 10,000 | |
| Office Equipment | 20,000 | |
| Accumulated Depreciation | 15,000 |
Liabilities
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable | 30,000 | |
| Salaries Payable | 10,000 | |
| Unearned Revenue | 5,000 | |
| Accrued Expenses | 5,000 |
Equity
| Account | Debit | Credit |
|---|---|---|
| Common Stock | 150,000 | |
| Retained Earnings | 50,000 | |
| Dividends | 10,000 |
Preparing the Balance Sheet
To prepare the balance sheet, we need to classify the accounts into assets, liabilities, and equity. We also need to ensure that the debits and credits are balanced.
Assets
- Cash: RM 100,000
- Accounts Receivable: RM 50,000
- Inventory: RM 75,000
- Prepaid Rent: RM 10,000
- Office Equipment: RM 20,000
- Accumulated Depreciation: RM 15,000 (contra-asset account)
Liabilities
- Accounts Payable: RM 30,000
- Salaries Payable: RM 10,000
- Unearned Revenue: RM 5,000
- Accrued Expenses: RM 5,000
Equity
- Common Stock: RM 150,000
- Retained Earnings: RM 50,000
- Dividends: RM 10,000
Balance Sheet
| Zara Enterprise Balance Sheet as of 31 July 2023 | |
|---|---|
| Assets | |
| Cash | RM 100,000 |
| Accounts Receivable | RM 50,000 |
| Inventory | RM 75,000 |
| Prepaid Rent | RM 10,000 |
| Office Equipment | RM 20,000 |
| Accumulated Depreciation | RM 15,000 |
| Total Assets | RM 260,000 |
| Liabilities | |
| Accounts Payable | RM 30,000 |
| Salaries Payable | RM 10,000 |
| Unearned Revenue | RM 5,000 |
| Accrued Expenses | RM 5,000 |
| Total Liabilities | RM 50,000 |
| Equity | |
| Common Stock | RM 150,000 |
| Retained Earnings | RM 50,000 |
| Dividends | RM 10,000 |
| Total Equity | RM 210,000 |
| Total Liabilities and Equity | RM 260,000 |
Conclusion
In conclusion, the balance sheet of Zara Enterprise as of 31 July 2023 provides a snapshot of the company's financial position. The company has a good balance of assets, liabilities, and equity. However, there are some areas that require attention, such as the high balance in accounts payable and the low balance in retained earnings. By analyzing the balance sheet, accountants can identify areas for improvement and make informed decisions to help the company achieve its goals.
Understanding Income Statement
An income statement is a financial statement that provides a snapshot of a company's revenues and expenses over a specific period of time. It is divided into two main sections: revenues and expenses. In this article, we will prepare the income statement for Zara Enterprise as of 31 July 2023.
Revenues
| Account | Debit | Credit |
|---|---|---|
| Sales | 200,000 | |
| Interest Income | 5,000 | |
| Dividend Income | 2,000 |
Expenses
| Account | Debit | Credit |
|---|---|---|
| Cost of Goods Sold | 150,000 | |
| Salaries and Wages | 30,000 | |
| Rent Expense | 10,000 | |
| Utilities Expense | 5,000 | |
| Depreciation Expense | 10,000 | |
| Interest Expense | 5,000 | |
| Income Tax Expense | 10,000 |
Preparing the Income Statement
To prepare the income statement, we need to classify the revenues and expenses into their respective categories. We also need to ensure that the debits and credits are balanced.
Revenues
- Sales: RM 200,000
- Interest Income: RM 5,000
- Dividend Income: RM 2,000
Expenses
- Cost of Goods Sold: RM 150,000
- Salaries and Wages: RM 30,000
- Rent Expense: RM 10,000
- Utilities Expense: RM 5,000
- Depreciation Expense: RM 10,000
- Interest Expense: RM 5,000
- Income Tax Expense: RM 10,000
Income Statement
Understanding Trial Balance, Balance Sheet, and Income Statement
In this article, we will answer some frequently asked questions on trial balance, balance sheet, and income statement.
Q: What is a trial balance?
A: A trial balance is a list of all general ledger accounts in a company, along with their debit or credit balances. It is an essential tool for accountants to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance.
Q: What is a balance sheet?
A: A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It is divided into three main sections: assets, liabilities, and equity.
Q: What is an income statement?
A: An income statement is a financial statement that provides a snapshot of a company's revenues and expenses over a specific period of time. It is divided into two main sections: revenues and expenses.
Q: What is the difference between a trial balance and a balance sheet?
A: A trial balance is a list of all general ledger accounts in a company, along with their debit or credit balances. A balance sheet, on the other hand, is a financial statement that provides a snapshot of a company's financial position at a specific point in time.
Q: What is the difference between a balance sheet and an income statement?
A: A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. An income statement, on the other hand, is a financial statement that provides a snapshot of a company's revenues and expenses over a specific period of time.
Q: How do I prepare a trial balance?
A: To prepare a trial balance, you need to list all general ledger accounts in a company, along with their debit or credit balances. You also need to ensure that the debits and credits are balanced.
Q: How do I prepare a balance sheet?
A: To prepare a balance sheet, you need to classify the accounts into assets, liabilities, and equity. You also need to ensure that the debits and credits are balanced.
Q: How do I prepare an income statement?
A: To prepare an income statement, you need to classify the revenues and expenses into their respective categories. You also need to ensure that the debits and credits are balanced.
Q: What is the importance of trial balance, balance sheet, and income statement?
A: Trial balance, balance sheet, and income statement are essential tools for accountants to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance. They also provide valuable insights into a company's financial position and performance.
Conclusion
In conclusion, trial balance, balance sheet, and income statement are essential tools for accountants to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance. They also provide valuable insights into a company's financial position and performance. By understanding these concepts, accountants can make informed decisions to help the company achieve its goals.
Understanding Zara Enterprise
Zara Enterprise is a company that operates in Ampang, Selangor. The company has a trial balance, balance sheet, and income statement as of 31 July 2023. In this article, we will analyze the financial statements of Zara Enterprise.
Trial Balance
| Account | Debit | Credit |
|---|---|---|
| Cash | 100,000 | |
| Accounts Receivable | 50,000 | |
| Inventory | 75,000 | |
| Prepaid Rent | 10,000 | |
| Office Equipment | 20,000 | |
| Accumulated Depreciation | 15,000 | |
| Accounts Payable | 30,000 | |
| Salaries Payable | 10,000 | |
| Unearned Revenue | 5,000 | |
| Common Stock | 150,000 | |
| Retained Earnings | 50,000 | |
| Dividends | 10,000 |
Balance Sheet
| Zara Enterprise Balance Sheet as of 31 July 2023 | |
|---|---|
| Assets | |
| Cash | RM 100,000 |
| Accounts Receivable | RM 50,000 |
| Inventory | RM 75,000 |
| Prepaid Rent | RM 10,000 |
| Office Equipment | RM 20,000 |
| Accumulated Depreciation | RM 15,000 |
| Total Assets | RM 260,000 |
| Liabilities | |
| Accounts Payable | RM 30,000 |
| Salaries Payable | RM 10,000 |
| Unearned Revenue | RM 5,000 |
| Accrued Expenses | RM 5,000 |
| Total Liabilities | RM 50,000 |
| Equity | |
| Common Stock | RM 150,000 |
| Retained Earnings | RM 50,000 |
| Dividends | RM 10,000 |
| Total Equity | RM 210,000 |
| Total Liabilities and Equity | RM 260,000 |
Income Statement
| Zara Enterprise Income Statement as of 31 July 2023 | |
|---|---|
| Revenues | |
| Sales | RM 200,000 |
| Interest Income | RM 5,000 |
| Dividend Income | RM 2,000 |
| Total Revenues | RM 207,000 |
| Expenses | |
| Cost of Goods Sold | RM 150,000 |
| Salaries and Wages | RM 30,000 |
| Rent Expense | RM 10,000 |
| Utilities Expense | RM 5,000 |
| Depreciation Expense | RM 10,000 |
| Interest Expense | RM 5,000 |
| Income Tax Expense | RM 10,000 |
| Total Expenses | RM 220,000 |
| Net Income | RM -13,000 |
Analysis
The financial statements of Zara Enterprise as of 31 July 2023 provide valuable insights into the company's financial position and performance. The company has a good balance of assets, liabilities, and equity. However, there are some areas that require attention, such as the high balance in accounts payable and the low balance in retained earnings.
Conclusion
In conclusion, the financial statements of Zara Enterprise as of 31 July 2023 provide valuable insights into the company's financial position and performance. By analyzing the financial statements, accountants can make informed decisions to help the company achieve its goals.
Understanding Trial Balance, Balance Sheet, and Income Statement
In this article, we have discussed the importance of trial balance, balance sheet, and income statement. We have also analyzed the financial statements of Zara Enterprise as of 31 July 2023. By understanding these concepts, accountants can make informed decisions to help the company achieve its goals.
Conclusion
In conclusion, trial balance, balance sheet, and income statement are essential tools for accountants to ensure that the accounting equation (Assets = Liabilities + Equity) is in balance. They also provide valuable insights into a company's financial position and performance. By understanding these concepts, accountants can make informed decisions to help the company achieve its goals.
Recommendations
Based on the analysis of the financial statements of Zara Enterprise as of 31 July 2023, the following recommendations are made:
- The company should reduce its accounts payable by paying its suppliers on time.
- The company should increase its retained earnings by reducing its expenses and increasing its revenues.
- The company should consider investing in new equipment and technology to improve its efficiency and productivity.
Conclusion
In conclusion, the financial statements of Zara Enterprise as of 31 July 2023 provide valuable insights into the company's financial position and performance. By analyzing the financial statements, accountants can make informed decisions to help the company achieve its goals.