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Entity’s capital – equity and loan payables

Capital of an entity is divided into two – internal and external capital. An internal capital is owner’s equity and external capital is what third party has “paid into the entity”. Normally loans given and not supplier payables are defined as external capital. The reason for that lies behind the subject matter – supplier payables […]

Accounting for transaction costs when lending money

With loans you’ll be taking, often times the transaction costs are a significant part of the loan, i.e. like in our example of lending 100,000 a contract fee of 2,000 would be considered as significant. Now in case the cost is less significant, say 500, this would be charged to expenses right away and you’d […]

Deliver terms in short

When selling your goods to a distance, it’s crucial to set the transfer or delivery terms. It’s not so much for understanding who has the rewards from the ownership but the risks. If something were to happen with the goods while in transfer, someone has to bear the costs. 

Factoring receivables

When we talk about factoring, we’re talking about selling ones receivables or collection of receivables to a third party commercial financial company. The aim of such a transaction is to receive cash quicker than one normally would if it would wait for the collection due dates or even late payments. You’ll be getting your money […]

Operating lease in your accounting

Once you’ve determined it really is an operating lease (i.e. the rights and obligations of an ownership are not transferred) and more so, you’ve made the initial payment for the lease, there’s time to start treating the lease on the statements. I say “statements” since it affects both, balance sheet and income statement. There are […]