So what do you do? Say the initial invoice was for 1,200 and now it turns out that your supplier was wrong and the actual amount should be 1,100. As such, they’re issuing a credit invoice. Continue reading
Category Archives: 1 Basic Accounting
A company is being winded up or going into bankruptcy and they haven’t issued an invoice for goods already delivered – what to do?
So the situation is as the title says. You bought goods from a company that’s now being closed and they haven’t issued an invoice for the goods as of yet regardless of the repeated requests from your part.
The first question you ought to ask yourself is the reason why the company is being winded up. Is it just an inability to pay invoices and the creditors asking for insolvency or is it the owners wanting to close down business with the company otherwise able to pay its debts. Continue reading
Accounting when producing
Accounting entries when you’re dealing with producing your goods are something that needs to be similar throughout. You have to have specific and pretty detailed accounting laid out – accounts, procedures and controls for measurement (i.e. to measure your own cost per unit). Continue reading
Producing
When we’re talking about goods, we can either talk about purchasing or producing them. Purchasing is a process where you buy something and resell the item to your customer with adding no or little value to the item. Producing however means that you buy materials and your produce an item out of those materials buy putting them together, changing them into specified forms etc. Continue reading
Recognising supplier prepayments
There are often times when you need to pay to your suppliers in advance. The reasons for why you’d need to do this may be what they are, but what matters to you, is recognizing those prepayments properly on your financial statements and treating them properly in your accounting. Continue reading
Payment onto share capital account
Payments into equity are made to two types of accounts – share capital and reserves. No payments are to be made to retained earnings. Retained earnings account can only be changed in two circumstances – for paying dividends (that is payment is done from retained earnings) or changed when dealing with restructuring, i.e. merging or dividing entities. That’s however something we’re not focusing on at this point. Continue reading
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 are operations related whereas loans are taken for further investments either for expanding the business, buying new equipment etc. Continue reading