Ayah Eca

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...

Each of the accounts is separated into two columns. The left hand column is used to show receipts and the right hand side is used to show payments. There is a simple rule to explain which side of the account you should list any particular transaction. Debit - the account that receives the goods, services or money. (The receiver) Credit - the account that gives goods, services or money. (The giver) A local business called Sharp Ltd has an account with Pepe. They often have long business meetings and have pizzas delivered. If we look at their account below we can see that on May 10 th they purchased pizzas from Pepe on credit. Sharp Ltd is the receiver of goods and the transaction is therefore entered on the debit side. On June 9 th (thirty days later) Sharp Ltd makes a payment for the goods. Sharp Ltd is the giver in this case and so his account is credited. Account of Sharp Ltd ...

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...

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...