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...

Assets are anything which the firm owns or has title to (in other words ownership of). The term net then means all assets net of liabilities. Net assets are therefore:- NET ASSETS = Total Assets - Total Liabilities The total assets are made up of fixed assets (plant, machinery and equipment) and current assets which is the total of stock, debtors and cash. The total liabilities are made up in much the same way of long-term liabilities and current liabilities . The net assets figure therefore can be used as a measure of the value of the business. It is the value of everything the business owns after all the debts have been taken account of. For more detail of how this can be used as a measure of the value of a business try going to the theory section of the worksheet below. Source: http://www.bized.co.uk/

You have already seen examples of the types of accounts held in each of the ledgers. You now have to think of the business as nothing else but a collection of accounts. Some of these accounts owe the business money and some of them are owed money by the business. All of the accounts must balance. At any one time the total value of the accounts in credit must equal the total value of the accounts in debt. When the business makes any transaction at all money is moved from one account to another. If for example Pepe makes a payment of £200.00 for some flour which he purchased from Alberto's wholesalers then Alberto's account is debited by £200.00. Alberto is the receiver of money and the transaction is therefore entered on the debit side. (Remember the principle; Debit the receiver, credit the giver.) Alberto's Account DR CR De...

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...