You sell goods; you issue invoices for those sales and hope for your clients to pay up what they owe to you. If they pay their debt in due time and in full amounts, the payment discipline is generally considered as good. However, once they begin to have overdue balances and problems with meeting the amounts, the payment discipline has changed and for worse. Continue reading
Category Archives: 1 Basic Accounting
Investment property – what is it?
No doubt you’ve heard the term “investment property” being mentioned or seen such line items on balance sheet’s of other companies. But what is investment property? Should you have investment property on your balance sheet?
In a nutshell an investment property is property you’re not using in your own business, that’s for one. You’re not using it for your own production, office or whatever similar activities, but rather for renting it out or you’re holding it for future profits (gain in fair value of the property). Continue reading
Disposing assets with a revaluation surplus
You’re using valuation method to account for the cost of your fixed assets and every now and then you need to value your assets up leaving you with a revaluation surplus as a part of the equity.
What happens if you dispose of the asset however? What happens with the revaluation surplus? Regardless of how you’ve decided to treat the surplus while depreciating the asset over it’s use, if you decide to dispose the asset and it has a revaluation surplus remaining on the balance sheet, it needs to be accounted somehow. Continue reading
Depreciating assets with revaluation surplus
So what happens if you have revalued an asset and as a result you now have a revaluation surplus on your statements, namely in equity? What happens with the depreciation of the asset and with this surplus over the period the asset is in use? Continue reading
Change in inventory – why is it on the income statement?
You may have noticed that sometimes the income statements of companies include a line named as “Change in inventory”. Why would it be there you might ask since “Inventory” is a balance sheet item and it’s an asset account? Why would it be on the income statement?
Matter of fact is that normally it isn’t there, however if there’s a change in inventory value, now there’s a reason to include a line item called “Change in inventory” onto your income statement. Continue reading
Work-in-progress in your inventories – what is it good for?
By definition work in progress is something that’s still in the progress of being finished. It’s no longer raw material and not just yet finished product either. In your accounting you’d refer “work-in-progress” to materials within the production process and partly finished products (i.e. components of finished products). Note that components may be part of some other components that are just another stage of the work-in-progress and not yet finished goods. Continue reading
Make salaries depend on results!
The best way to motivate people to work better, more efficient and more profitable is making their salaries, the thing they work for; depend on the results of their work. That’s a no brainer.
Place it works the best obviously is where the employee actually feels they can do something to earn a better pay. For an example you cannot use such a scheme with support staff in the office – they have no contact with the customer, the customer doesn’t see the fruits of their work, i.e. if it’s an accountant we talk about. Continue reading