Let’s say you’ve initially measured your assets using the depreciation method. This means that the cost of the asset is subsequently expensed showing also the “drop in its value” and in essence what you’ve been doing so far is distribute the expense of the investment over the period it’s being used. Continue reading
Category Archives: 1 Basic Accounting
Entries – paying upfront, i.e. making a prepayment
In business it often happens that you’re either asked or you’re willingly making a prepayment to your supplier. You will receive goods or services at a later date compared to when you pay for them. Continue reading
Entries – you’re buying assets
Initial recognition of assets, i.e. property, plant and equipment items or intangible assets like software etc. doesn’t differ much from when you recognize inventory for an example. It’s the subsequent measurement that’s more complicated when it comes to accounting those types of assets. Continue reading
Entries – you’re receiving services
Buying services or goods for your own use – the accounting treatment is the same.
Essentially something you must realize is that you’re making an expense for your business. Even if it’s buying goods that you will use for your own business, i.e. office supplies or some such, it’s an expense for your accounting. Continue reading
Entries – you’re buying goods
When buying goods there are two types of goods you can buy – ones you use yourself in your business or the ones you sell to your customers. Since first are treated as buying services really, we’re not going to focus on those in this post, but the second one. Continue reading
Goods were shipped into my warehouse, now what?
You received goods into your warehouse and now they’re just lying there all boxed up. In order not to mess things up, you should do some things in order and be careful. Your course of actions: Continue reading
Decision to be made – to lease or to buy?
Effectively there are two ways of “owning” an asset – leasing it or buying it. Yes, leasing refers to renting it and actually buying the asset means you can get a hold of the factual ownership, however, most importantly, with both forms you can use the asset and that’s what we’re on about at the moment. Continue reading