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...

What do you understand by the word " Asset? " Assets are items which are owned by a business or money which is owed to the business. If Pepe owned his pizza parlour then the building would be an asset of his business. Assets fall into two groups: Fixed Assets - These are items which have a life span of more than one year. They are usually items that the business expects to keep. Fixed assets include land and buildings, plant and machinery, fixtures and fittings and motor vehicles. These assets fixed because they are necessary for the business to trade but are not affected by the level of trade or the profit made. If a business purchases any fixed assets then this is known as capital expenditure. If Pepe decided to purchase a new delivery van then it would be a new fixed asset of the business. Current Assets - These are items which are much shorter term. The value of these items change in proportion to the amount of ...

by Ken Delaney-Moore, Sheffield Hallam University Aims: This worksheet deals with: The need for objectivity and consistency within the accounting profession. The concepts of going concern, accruals, prudence, consistency, cost, materiality, business entity, money measurement, realisation and dual aspect. The main provisions of SSAP 2 After having completed the worksheet you should be able to explain 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. Introduction Imagine that you are a business owner, and you take copies of your financial records ('books') to six different accountants. You ask each one to calculate your profit for the year. A fortnight later they each provide you wi...

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...