# Introduction to Financial Accounting

Adjusting a trial balance into a classified balance sheet involves dividing out the balance sheet to show both the current and long-term debt and assets held by the company.   A balance sheet will give information about a companyâ€™s assets, liabilities and shareholdersâ€™ equity.   Together these three documents will the view a basic understanding of the profitability of a company.   In this assignment I have put together a balance sheet and income statement, with the provided trial balance sheet, while making two adjustments to the original balance sheet.
The effects of the errors on the income statement, and balance sheet.
On the original balance sheet the inventory showed \$80,500, when the current inventory is really \$75,000, making a difference of \$5,500 dollars.   The reduction in inventory affects the inventory figure on the balance sheet and the cost of goods sold on the income statement.   With the reduction of inventory on the income statement will cause an increase in the cost of goods sold, going from \$402,610 to \$408.100 therefore affects the level of income (Walther, 2010).   The net income on the original income statement was \$89,100, now it is \$83,600, this number is also is reflected on the balance sheet in the net income.
The customer payment of \$10.000 increases the Cash on the balance sheet from \$41,500 to \$51,500.   This will also decrease the accounts payable from, \$18,000 to \$8,000 (Walther, 2010).   .
Is this company profitable?
One indicator of a profitable company is the net income, as this tells the reader of the financial statement if the company made a profit for that year (Codjia, n.d.).   However this is not the only document an investor wants to look at.   To see the whole financial picture one must comb through the annual reports (Chakrabarty, 2011).
Is the company in a solid financial position?
The company appears to be in a solid financial position for the year.   The company has cash in the amount of \$51,500 and a net income of...