UNDERSTANDING FINANCIAL STATEMENTS ABC Company Income Statement For the year ended December 31, 2020 Sales pox Cost of Sales OK Gross Profit OK Less: Operating Expenses Salaries Expense sonar Rent Expense 2000 Selling Expenses 2000 Depreciation Expense 2000 Total Expenses soe Earnings before interest and taxes Oo Less: Interest Expense KK Eaming before taxes 3 Less: Income Tax soo Net Income "can be functional or naturalABC Company Balance Sheet As of December 31, 2020 Assets Currents Assots Notes Cash and Cash Equivalents @) Inventories @ Trade and Other Receivables (5) Prepayments Total Current Assets Non-Current Assets Property, Plant and Equipment Intangible Assets Total Non Current Asset Total Assets Liabilities, Current Liabilities Trade and Other Payables Current portion of longterm debt Total Current Liabilities Non-Current Liabilities Longterm Obligations Bonds Payable Total Non-Current Liabilities Total Liabilities Shareholders’ Equity Common Shares Preference Shares Retained Earnings Total Equity ‘Total Liabilities and Equity sone soc sone sone soc soon xe sone sence Te sone 3000 BooedABC Company Cash Flow Statement For the year ended December 31, 2020 Cash Flow from Operating Activities Net Income Depreciation Increase /Decrease in Inventories Increase Decrease ia Accounts Receivable Increase Decrease in Accounts Payable Net Cash provided by Operating Activities Cash Flow from Investing Activities Jncrease in Property Plant and Equipment Proceeds from sale of Property Plant and Equipment Net Cash provided by esting Activities ‘Cash Flow from financing Activities Tncrease/Decrease in Non Current Liabilities Issuance of Shares Payment of Dividends Net Cash provided by Financing Activities Net Change in Cash’ Add: Cash and Cash Equivalents, beginning Cash and Cash Equivalents, ending Note: Reconciling Accrual Basis of Accounting soot soot 2000 sootABC Company Cash Flow Statement For the year ended December 31, 2020 Cash Flow from Operating Activ Cash Receipts from Customers Cash Paid to Suppliers Cash Paid to Employees Interest Paid Income Taxes Paid Net Cash Flow from Operating Activites Cash Flow from Investing Activities Purchase of Property, Plant and Equipment Cash Receipts from Sale of Property Plant and Equipment Net Cash Flow from investing Activities ‘Cash Flow from financing Activities Proceeds/Payments from Long Term Borrowings Issuance of Shares, Dividends Paid Net Cash Flow from Financing Activities Net Change in Cash Cash atthe Beginning of the Year Cash at the End of the Year ‘Net Increase/Decrease in Cash ‘Note: Cash basis method is incorporated xXxABC Company Statement of Changes in Shareholders Equity For the year ended December 31, 2020 Share Capital. Beginning 2x Add: Issued Shares, roo Share Capital, Endin; Ze Retained Eamings, Beginning 2x Add: Net Income eee Less: Dividends Paid XXX, Ending Retained Eamings ee Total Sharcholders EquityABC Company ‘Notes to Financial Statements For the year ended Desember 31, 2020 Note 1: Company Profile Note 2: Subscription of Shares Note3: Cash and Cash Equivalents ‘Cashion Hand sok Ceshin Basie xox Patty Cash Fund od ‘Marketable Securities sox Total x Noted: Inventories Raw Materials od “Workin Process xox Finish Goods a Total Note 5 Tradeand Other Receivables Accounts Receivable sox Other Receivables xox Less: Allowance for Doubtiol Accounts — Total = Note 6 Property, Plent end Equipment Land soot Building and Equipment — Less: Accumulated Depreciation so Total a Note7) Trade and Other Payables Notes Payatle soon ‘Accounts Payable os Salaries Payable eset Interent Payable reset Income Tax Payable — Total aSchedule 1: Net Sales (Cash Sales Credit Sales Less: Sales Discounts, Returns and Allow. Total Schedule 2: Costof Sales, WIP - beg Direct Materials Cost Direct Labor cost Factory overhead Total Manufacturing Cost Less: WIP- end Cost of Goods Manufactured dé: Finished Goods - bez Total Goods Availabe for Sale Les: Finished Goods -end Total Schedule 3: Operating Expenses Administrative Expenses Selling Expenses Other Expenses Total