When we talk about inventory and its value you may hear or read the word “active market” being used. What is an active market however?
An active market when it comes to measuring the value of inventory essentially is the market you are expected to sell your goods. It’s not the market you plan to go with your products, it’s the market you are already in, you make regular sales and you can estimate a selling price over there. Continue reading
A revenue is when you’ve sold something and you make an out an invoice to your client. Either you have contractual rights to make the invoice or the client is in your store, just bought something and you have every right to make the invoice.
However, what happens when you cannot just yet make out the invoice – either you are not yet allowed by the contract or you don’t know who to make the invoice out to or some such. What happens then?
In a case where you’ve made expenses, you plan to sell something to the other party and you cannot just yet make out the invoice, you account for deferred revenues showing that you have earned them, but in your accounting they are not yet accounts receivables.
Essentially in your accounting the entry is as follows: Continue reading
Your prepayments may comprise of various types – to give two examples, those you require for certain orders made and those that your clients have bought for an example in the form of gift cards.
To follow up those two types in accounting, the approach is a bit different. The prepayment made for a certain order is undoubtedly going to be used up. That’s the first bit of thing that’s different. In your accounting initially you account for the prepayment with: Continue reading
Let’s get one thing cleared right away; opting for a choice in how you handle the vacation payments is only possible if it’s allowed by your local legislation. There might be options defined in a way that you can agree on something else compared to what’s described in the legislation, but for the employee it cannot be with adverse impact compared to the legislation rules.
So, let’s assume in your country it’s allowed to opt for something else – something that’s better for employees. Obviously you can come up with in addition to what we’re about to discuss, but I just want to introduce you to an option. Continue reading
To increase salaries or pay bonuses (if you already aren’t paying the latter, it’s a questions of whether to start in the first place) – that’s the question some employers face almost each year. On one hand you want to motivate your employees and reward them, on the other it’s a question of maintaining a salary level that keeps your employees happy and wanting to work for your company each month.
How to best answer the question should be as follows – is the company viable and able to pay more each month? Matter of fact is that if you’re wondering whether to increase salaries, you’ve most probably already made up your mind that you want to do that, but it’s a question of reasoning – why are you doing this? Continue reading
Paying bonuses to your employees is an admirable deed – it makes people feel motivated and valued. When it comes to rewarding in the work place, bonuses are something that works the best.
In accounting however, how should you account for bonuses? Continue reading
Every now and then it may happen that you make a sale as selling to your customers – i.e. wrong prices, wrong items etc. Like your suppliers make such mistakes, so can you.
When such a situation arises, what you do is credit your sales and send a credit invoice to your customer. Your accounting entry is as follows:
Db Sales revenue
Cr Account receivables
Note how you don’t account for an expense but you decrease your sales revenue. Alongside with taking a bit off from your revenue, you also decrease the balance sheet item, receivable balance. Continue reading