Author Archives: Karl

Necessary parts of a loan agreement

Forming loan agreements is something you normally are involved with when you’re giving out loans. Rarely it’s something someone getting a loan needs to do because it’s the risks of the loan giver that need to be covered. Whilst it’s a communication and agreement between parties, there’s still one party that’s in a driver’s seat sort of say.

Now, if you ever find yourself in this seat, there are a few things you need to make sure are set out in the formal agreement. And yes, the agreement needs to be formal or at least written because how else would you prove you ever gave a loan?  Continue reading →

A purchase order in a nutshell

A purchase order or a “PO” in short stands for a process before the purchase transaction itself. It is one thing to make a purchase, but thinking a few steps before the act itself is what the PO is about.

A purchase order is either a procedure in place in your business (or one you can implement) or it’s at least an idea of what you may want to consider before making the transaction. It includes:  Continue reading →

Making a purchase, what does it mean?

Making a purchase is a process, a flow of activities that need to be done in order to have an accurate transaction in your accounts, all relationships in good shape and the transaction taking place also in reality.

When first making a purchase, depending on the size or procedures in place in your business, there should be something called a purchase order that needs to be considered. In this sense I mean “considered” as implemented or at least the idea and what it imposes should be considered when making the purchase.  Continue reading →

Expenses and purchases

Expenses in your business can be of various types (or for various purposes) – cost of goods sold, administrative and other operations related charges, payroll expenses, depreciation of assets etc. Those are the general types of expenses a business can have as a part of their income statement. They support the business in one way or another and are part of generating revenue at the end of the day.  Continue reading →

PPE components – what if something is consisting of components?

A property, plant and equipment (from hereon “PPE”) item, a tangible asset can consist of components rather than being one unit. Sometimes it can be apparent, however often enough it’s just forgotten.

When it comes to PPE items and their components – think useful lives and replacement. If something of something that’s exceeding the threshold for being recognized as an asset on its own will be replaced sooner than the something itself, than this something of something should be accounted as a component of this something.   Continue reading →

Tangible and intangible assets

Assets are something you use in your business – either for production, supporting your business, housing your office etc.

For production purposes you may have machinery, equipment, for supporting your business you would use printers, computers and so on. Obviously another thing you may have for your business is an office, which if not being rented, is most probably also your asset. Now those are tangible assets. Tangible means that you can physically touch them since they do have a physical form.  Continue reading →

Accounting for account payables

Account payables are your liabilities you have against your suppliers. As it is apparent from the name, on the balance sheet account payables are shown under liabilities, on the opposite side of your assets.

Generally speaking, an account payable can occur when you’re either buying assets, goods or services. It doesn’t really matter if the goods bought are to be resold or used in your own business (i.e. if they are to be included within your inventory until they are sold or if they are to be expensed right away).  Continue reading →