Author Archives: Karl

When it isn’t offsetting?

On the face of balance sheet and income statement there are certain items which are never considered as offsetting for certain items (something that’s not allowed on most cases as we’ve pointed out in one our posts about offsetting), but compulsory to be included within certain line item groups. If anything, it’s called netting.  Continue reading →

Offsetting balances and transactions

“Offsetting” means having for an example a receivable balance and then decreasing it with a liability to the same party. In net effect it means you’re having fewer receivables and liabilities on the balance sheet. Obviously the parties need to be the same to offset the balances and mind you, it works the same with liabilities being offset with receivables and expenses with income and so on.   Continue reading →

To write down or off

First off let me explain what each option means. When we’re talking about writing down something, say receivables, what we mean is that you create an allowance account with an opposite sign onto the balance sheet so that it decreases the receivable account. Now as to writing balances off means that they’re taken off from the balance sheet completely. Note that the opposite entry for both is an expense entry on the income statement. It’s just all about what’s left or not left onto the balance sheet.  Continue reading →

Writing down bad receivables

In the case something goes bad with your receivable balances, some or just one balance, they’re to be written down at least. I say “at least” because one of the options is to also write them off, meaning taking them off the balance sheet entirely. This can be done after they’re written down just as well, but let it be said that writing something down means you consider there’s still some hope whilst writing the balances off means you don’t see any collection there to be made.  Continue reading →