Should the event arise that you consider a receivable uncollectable in full or in part, that is you consider that your customer considering the circumstances wont be able to pay what they owe, you either decide to write the receivable down in value to the amount they will be able to pay (that is you’re making an estimate) or off the balance sheet if you’ve determined that they cannot pay you anything. Continue reading
Author Archives: Karl
Basic accounting routines and entries – revenue and receivables
With your sales revenue, with your process over your company’s revenue and receivables it’s crucial you have routines in place on one hand and as a general rule, but it’s also important to have your everyday accounting entries in place. Continue reading
Revenue and receivables
Revenue and receivables are your primary process when it comes to earning profits, earning resources to spend, to invest.
Something to note is that revenue is just this one stream on your income statement, it’s the stream of your income for the defined period and it arises from the sale of goods or services (whatever your company is in business of doing). There are other streams on your income statement which can be defined as expenses, but we’re not about to discuss those. Continue reading
Controls over production and inventory
Why do you think it’s important to have controls over inventory?
Inventory is related to your company’s operations. They are what you sell to generate revenues, they are your assets you sell regularly to earn profits. Note here that earning profits requires that your goods are priced accurately so as to cover for all kinds of expenses your company incurs. Continue reading
Regular monitoring of stock levels
Regular monitoring of stock levels is essential for every business regardless of your production cycle, whether it’s a day or a month long. Continue reading
Cash flows from financing activities
Statement of cash flows includes group cash flows that aren’t related to operations nor investments. If you think about it, your company operates, that’s it’s primary purpose. Your company also invests into assets, whether they’re physical assets, financial assets or say subsidiaries. However, your company also needs financing (that is investments to parties making those financing cash flows). If first two are sort of internal activities, the third is related to external activities, namely showing how much money the company has been able to get from third parties and how much has it paid back to those parties. Continue reading
Cash flows from investing activities
One of the reasons why it’s important to have positive cash flows from operations arises from the fact that for sustainability your company at some point needs to invest. The investments may be smaller and regular or substantial and take place less often, however the fact remains that to keep the business going at one point you will require investments. Continue reading