Financial statements

Adjusted trial balance

A list of accounts and their balances, including the adjusting accounts at the
end of the accounting period.
Financial statements:

1) Income statement
2) Retained earnings statement
3) Balance sheet (statement of financial position).
4) Cash flows statement.

Note: All financial statements are prepared from the adjusted trial
balance except CFs statement
1) Income statement

- Reports the success or profitability of the companys operations over a

period of time.
Total Revenues Total Expenses = net income or net loss
2) Retained earnings statement

- Reports the changes in retained earnings over a period of time.

Beginning retained earnings

+/- Net income or net loss
- Dividends .
Ending retained earnings
3) Balance sheet (statement of financial position)

- Presents a snapshot of a companys financial position at a point of time.

- Assets = Liability + Equity

The classified financial position statement

A) Assets: all resources a business owns and consists of

1) Current assets
2) Fixed assets
3) L-T investment

1) Current assets
- Assets that a business expects to convert to cash or use within one year
or one accounting period.
- Examples: Cash, supplies, inventory, A/R, prepaid exp, accrued revenue.

2) Fixed assets
- Long lived assets that a business uses in its operation and in the process
of generating revenues.
- Fixed assets consists of tangible and intangible assets.

Tangible assets
Long lived assets that have a physical substance that a business use in its
operations such as land, building, equipment, vehicles.
Intangible assets
Long lived assets that dont have a physical substance and they are often
very valuable. Such as goodwill, patent, trademark, copyright.
3) Long term investments: are generally investments in

- Shares and bonds of other companies.

- Fixed assets that a business doesnt use in its operations.
B) Liabilities: the claims of creditors against assets and consist of

1) Current liabilities: are the obligations that a business expects to pay

within 1 year or one accounting period. Such as A/P, salaries payable,
interest payable, unearned revenue and accrued exp.

2) Long-term liabilities: are the obligations that a business expects to pay

after 1 year. Such as bond payable and long term debts and loans.

C) Equity: the claims of owners against assets and consists of

1) Share capital
2) Retained earnings
 Miraval Company
Adjusted Trial Balance for the Period ended Mar. 31, 2014
Account Title Dr. Cr.

Cash 10,900

Accounts Receivable 14,000

Supplies 3,000

Prepaid Insurance 8,400

Buildings 33,000

Unearned Service Revenue 9,800

Taxes Payable 2,200

Share Capital 40,000

Retained Earnings 5,000

Dividends 10,000

Service Revenue 31,000

Salaries Expense 4,200

Depreciation Expense 2,500

Supplies expenses 2,000

Total $88,000 $88,000

Instructions:
1. Prepare an Income Statement for the period ending Mar. 31, 2014
2. Prepare a Retained Earnings Statement for the period ending Mar. 31, 2014
3. Prepare a Classified Statement of Financial Position at Mar. 31, 2014