Things develop and as it happens, software can get caught in the progress in the sense it’s not so modern anymore and doesn’t quite meet the needs of a business. Changing an accounting software isn’t all that complicated in itself, but there are a few things to watch out when doing so. Continue reading
Author Archives: Karl
What should be the payment term for sales invoices?
It’s one thing to make the sales happening, i.e. having something to sell, having customers and so on, but it’s another thing to manage it all properly. If payments are done on spot, there’s no issues really in terms of invoices, however, if you’re using invoices, i.e. your customers can pay at a later date, the question is, what will the “later date” be. Continue reading
What should the capitalization level be for PPE items?
Initially, when acquiring an asset, you account the purchase amount to your PPE ledger and balance sheet. Question is however, from what sum should you start accounting purchases (namely assets and not services obviously) as items of PPE? Continue reading
Changing the useful life of an asset
Let us say you’ve determined a useful life for an asset and as it happens, you want to change it.
Generally saying the reasons for changing the useful life is pretty straightforward – an event has triggered the asset to be used for a shorter or a longer period. This event can be a few things: Continue reading
Deciding on a useful life
An asset’s useful life is the period it’s planned to be used – normally longer than 12 months for it to be part of property, plant and equipment.
When you purchase an asset and you’ve initially accounted for it (the asset and the respective liability), there are numerous things you ought to determine for the asset to account for it subsequently. Continue reading
Bringing forward beginning balances
An account on the balance sheet consists of following components – brought forward balance, debits and credits for the period and carried forward balance (a sum of the brought forward balance, the debits and the credits) that’s taken as a new beginning balance to the next period.
Brought forward balance or a beginning balance is something you start to build your current period’s balance onto. As such, it’s crucial that you bring forward correct balances on correct accounts. Continue reading
Why spread expenses over periods?
Instead of spreading expenses over period they relate to one could simply add the total to one period’s expense and be done with it. Of course, that is an option.
However, when you think about it, wouldn’t it make more sense to have an expense spread? Surely you can see the benefits – less expense for one period for one. Continue reading