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Financial & Managerial Accounting
Found in: Page 80
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

Which financial statement is sometimes called the statement of financial position?

A balance sheet is called the statement of financial position.

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Step by Step Solution

Financial statement

A financial statement is the summary of a certain set of accounts depicting the closing balances. This set of accounts is prepared based on the nature and durability of the account. There are four kinds of financial statements namely –

a) Income statement

b) Retained earnings statement

c) Balance sheet

d) And cash flow statement

Statement of financial position

A statement of financial position is a statement that depicts the closing balances of all accounts that need to be carried forward over the next accounting period. So this statement is none other than the Balance sheet.

The balance sheet is called the statement of financial position as it depicts the balances for all resources that a business owns and the claims of the business by different parties at a particular point of time.

Most popular questions for Business-studies Textbooks

Humble Management Services opened for business and completed these transactions in September.

Sep. 1 Henry Humble, the owner, invested $38,000 cash along with office equipment valued at $15,000 in the company in exchange for common stock.

2 The company prepaid $9,000 cash for 12 months’ rent for office space. (Hint: Debit Prepaid Rent for $9,000.)

4 The company made credit purchases for $8,000 in office equipment and $2,400 in office supplies. Payment is due within 10 days.

8 The company completed work for a client and immediately received $3,280 cash.

12 The company completed a $15,400 project for a client, who must pay within 30 days.

13 The company paid $10,400 cash to settle the payable created on September 4.

19 The company paid $1,900 cash for the premium on an 18-month insurance policy. (Hint: Debit Prepaid Insurance for $1,900.)

22 The company received $7,700 cash as partial payment for the work completed on September 12.

24 The company completed work for another client for $2,100 on credit.

28 The company paid $5,300 cash in dividends.

29 The company purchased $550 of additional office supplies on credit.

30 The company paid $860 cash for this month’s utility bill.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128); Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307); Dividends (319); Services Revenue (401); and Utilities Expense (690). Post journal entries from part 1 to the ledger accounts and enter the balance after each posting.

Question: Denzel Brooks opened a web consulting business called Venture Consultants and completed the following transactions in March.

March 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange for common stock.

2 The company prepaid $6,000 cash for six months’ rent for an office. (Hint: Debit Prepaid Rent for $6,000.)

3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200. Payment is due within 10 days.

6 The company completed services for a client and immediately received $4,000 cash.

9 The company completed a $7,500 project for a client, who must pay within 30 days.

12 The company paid $4,200 cash to settle the account payable created on March 3.

19 The company paid $5,000 cash for the premium on a 12-month insurance policy. (Hint: Debit Prepaid Insurance for $5,000.)

22 The company received $3,500 cash as partial payment for the work completed on March 9.

25 The company completed work for another client for $3,820 on credit.

29 The company paid $5,100 cash in dividends.

30 The company purchased $600 of additional office supplies on credit.

31 The company paid $500 cash for this month’s utility bill.

Required

2. Open the following ledger accounts—their account numbers are in parentheses (use the balance column

format): Cash (101); Accounts Receivable (106); Office Supplies (124); Prepaid Insurance (128);

Prepaid Rent (131); Office Equipment (163); Accounts Payable (201); Common Stock (307);

Dividends (319); Services Revenue (403); and Utilities Expense (690). Post the journal entries from

part 1 to the ledger accounts and enter the balance after each posting.

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