Author Archives: Karl

Expenses on which you need to pay taxes

In your everyday accounting there are bound to be some expenses on which you need to pay taxes according to your local legislation. Be them taxes on special benefits or VAT on general purchases, it’s important nonetheless to have an overview of the amounts the tax should be calculated on.

If the tax is on special type of expenses, say canteen expenses you pay for your employees, do make sure those expenses are accounted on a separate account so you’d have clear and easy overview of the amount. Continue reading →

Inventories in either their cost or net realisable value

Something to note in your everyday accounting is that your inventory should always be accounting it’s lower or either cost or net realisable value. I know that you may have already known that, but are you really accounting your inventory accordingly?

If you’re adding some expenses to your cost of inventory you’re treating it most probably pretty accurately. That is of course if those expenses are really relating to inventories at hand. However, when you’re comparing the cost against the selling price of this specific item, are you earning profit or loss? Is the realisable value higher than the cost? Continue reading →

Disposing assets in the annual report

Something I have come across too often now is the inability to show movements in property, plant and equipment (PPE) correctly.

Situation of what’s done in everyday accounting with PPE items is as follows:

Assets are disposed in accounting on a regular basis in their cost and accumulated depreciation;
The carrying value of disposed assets may or may not be zero, doesn’t matter;
Assets are also acquired and existing assets are depreciated. Continue reading →

You got assets in a politically unstable country

I don’t want to go into too much detail of what’s happening in the world right now and whether something is right or wrong, but what I do want to stress is that such events do have their effect on accounting.

Something to note is that the effect is only then there if you’re actually dealing with companies from the countries involved. So let’s say that you’ve got just customers from there and no other activities, stores etc. What should one watch out for? Continue reading →

Deposit account

Your cash is deposited on a bank account but is it an ordinary account or is part of a deposit account? Matter of fact is that a deposit is something that earns you a bit more than an ordinary bank account.

Managing a deposit account however means two things: Continue reading →

Cost accounting

You buy a material that’s say 5 sq. m and you will cut out something that’s only 4 sq. m from the original material. How much will the 4 sq. m cost for you?

Mathematically it would cost less since you’ve got less material, namely 25% less. If you had bought 4 sq. m materials, you would only have paid for the amount you actually used.

However, if you buy 5 and only use 4, your expense is for the 5 you need to account. You bought 5 sq. m materials to get 4 sq. m. Your expense hence is for the full 5 to get only 4 sq. m. Continue reading →

Negative vacation reserve

So what if you allow your employees to use more vacation than they have got to use. What happens in your accounting?

Technically speaking, let’s discuss regulation first. It’s crucial to understand if your legislation allows such activity and if you’d be required to pay additional fees on such “negative reserve”. It is really up to your local legislation so consult any guidance available beforehand. Continue reading →