Ayah Eca

As we have seen from the explanation of net assets , the net assets are composed of the fixed assets and the current assets less the current liabilities and the long-term liabilities . This means that they are a measure of the total worth of the business - what it should be worth if it was shut down tomorrow and all its debts paid. However, it is extremely unlikely that it would actually be worth this sum, as many assets would be worth a very different amount if you actually tried to sell them. What may be an invaluable machine to one company may be a worthless lump of scrap-metal to most others. If this is true that they represent the total worth of the business at any moment in time, then we can use the net assets as a measure of the size of the business. However, it is far from a perfect measure of the size of the business and there are various other ways of measuring the size of the business. These may include:- Number of employees Sales reven...

If you lend someone some money, what conditions would you attach to it? First, hopefully, you would set the time they had to pay it back. Secondly you may decide to attach further conditions like paying interest or perhaps even a penalty clause if they failed to pay up on time (though stick here to financial penalties rather than physical ones that may be illegal!). The same is true of any business. If they sell goods and offer a period of credit then they have to ensure that all the debts are paid and that they are paid on time. This is known as debt / credit control . Debt control is an important part of business activity because although a debt is an asset, it is not as liquid an asset as cash in the bank. Employees would not be very happy to hear that they will be paid when your debtors pay up, they would rather have cash now, as would your creditors! Firms therefore have to ensure they collect their debts as efficiently as possible within the terms they have set for th...

by Ken Delaney-Moore, Sheffield Hallam University Aims: This worksheet deals with: The accruals 'concept' The effect of prepayments on expense accounts. The effect of accruals on expense accounts. After having completed the worksheet you should be able to explain both of these points. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you. The accruals concept This is a rule, like the 'business entity concept' and 'dual aspect concept'. It means that when we calculate the profit for (say) 'Year 1', we should deduct expens...

by Ken Delaney-Moore, Sheffield Hallam University Aims: This worksheet deals with: 1. Balancing-off accounts 2. Preparing trial balances After having completed the worksheet you should be able to explain both of these points. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you. Balancing - off accounts Look at the following 'cash' account: Debits £ Credits £ 1 8 Capital 2000 2 8 Bank 1500 4 8 Sales 150 3 8 Purchases 300 7 8 Sales 140 5 8 Creditor - K.Lucas 180 6 8 Motor expenses 130 Q1. The 'balance' on this account is the difference between the totals of the debit and credit values. Enter this figure in the space provided (Don't use a £ sign). (Type your answer) Q2. If this account were a pair of scales, and the values ...

Fixed assets are those assets of the business that have a long life, are used in the business and are not for re-sale or for conversion to cash, e.g. motor vehicles, machinery, buildings, land, office equipment, etc. However, usually, except for land, most fixed assets have a limited number of years of useful life. Depreciation can be defined, in its simplest terms, as the difference between the original cost of the asset and the amount received when the asset is sold, for example, if Pepe buys a motor vehicle for £ 20,000 and then sells it for £ 8,000, then the total depreciation is £ 12,000. If an asset is bought and sold within one accounting period, (normally one trading year) then the depreciation can be accounted for within one accounting period. However difficulties arise because most assets are used for more than one accounting period. Pepe is planning to keep his vehicle for four years. In this instance there are two...

Fixed assets are those assets of the business that have a long life, are used in the business and are not for re-sale or for conversion to cash, e.g. motor vehicles, machinery, buildings, land, office equipment, etc. However, usually, except for land, most fixed assets have a limited number of years of useful life. Depreciation can be defined, in its simplest terms, as the difference between the original cost of the asset and the amount received when the asset is sold, for example, if Pepe buys a motor vehicle for £ 20,000 and then sells it for £ 8,000, then the total depreciation is £ 12,000. If an asset is bought and sold within one accounting period, (normally one trading year) then the depreciation can be accounted for within one accounting period. However difficulties arise because most assets are used for more than one accounting period. Pepe is planning to keep his vehicle for four years. In this instance there are two...