Something I have come across too often now is the inability to show movements in property, plant and equipment (PPE) correctly.
Situation of what’s done in everyday accounting with PPE items is as follows:
I don’t want to go into too much detail of what’s happening in the world right now and whether something is right or wrong, but what I do want to stress is that such events do have their effect on accounting.
Something to note is that the effect is only then there if you’re actually dealing with companies from the countries involved. So let’s say that you’ve got just customers from there and no other activities, stores etc. What should one watch out for? Continue reading
Your cash is deposited on a bank account but is it an ordinary account or is part of a deposit account? Matter of fact is that a deposit is something that earns you a bit more than an ordinary bank account.
Managing a deposit account however means two things: Continue reading
You buy a material that’s say 5 sq. m and you will cut out something that’s only 4 sq. m from the original material. How much will the 4 sq. m cost for you?
Mathematically it would cost less since you’ve got less material, namely 25% less. If you had bought 4 sq. m materials, you would only have paid for the amount you actually used.
However, if you buy 5 and only use 4, your expense is for the 5 you need to account. You bought 5 sq. m materials to get 4 sq. m. Your expense hence is for the full 5 to get only 4 sq. m. Continue reading
So what if you allow your employees to use more vacation than they have got to use. What happens in your accounting?
Technically speaking, let’s discuss regulation first. It’s crucial to understand if your legislation allows such activity and if you’d be required to pay additional fees on such “negative reserve”. It is really up to your local legislation so consult any guidance available beforehand. Continue reading
How such a situation may arise is when you know what you’ve delivered and you recognize revenue based on that, however, not all invoices from your suppliers, subcontractors etc. have reached you.
What to do in such a situation? Continue reading
Yes and no I would say. It confirms you have a balance due from the client, so that’s something, but whether the client is able or willing to pay, is another story.
What a confirmation gives you is grounds to have the balance in the first place so there’s that. You have the right to recognize the receivable balance and it’s something you’re owed to. By all accounts your client should therefore also pay up, i.e. it’s collectable. You have an asset you have the right to in your accounts and rightfully so. Continue reading