Category Archives: 2 Processes

Non-current assets and their treatment

To define the term ‘non-current assets’ requires that we address the concept of liquidity. An asset is liquid if it can be realized within a short period of time and with ease without losing any of its value (normally assumed within a year). Liquid assets comprise your company’s ‘current assets’. However if an asset is not as liquid due to its nature and its use for your company, it’s treated as a ‘non-current asset’ on your company’s balance sheet.  Continue reading

Recognizing paying to suppliers

Recognizing supplier payables is one thing; it’s another to pay those payables however. We’ll discuss separately all the routines governing the handling and an appropriate approach when it comes to supplier invoices (i.e. how you ensure that you’re paying for the right service or material, in the right price and in due time), as it is, with this we want to give you an overview of which accounting entry you make within your books when you’re paying to your suppliers.  Continue reading

Recognizing purchase of materials

Making purchases is part of everyday business. You cannot cooperate without buying certain services or materials (unless you’re actually producing materials and finished products from them yourself and don’t require any outside service, i.e. internet, paper to print invoices on etc.). So as such you need to familiarize yourself with recognizing accounting for such payables and moreover, for the corresponding entry.  Continue reading

Sales prices

Your sales prices are values you consider sufficient for a product or for a service to cover expenses made directly for the sellable unit and to also cover for those general expenses not related to production or providing the service (your company’s administrative, marketing and other expenses).  Continue reading

Writing receivables off the balance sheet

So you’ve identified that a certain receivable balance is impaired and the collection of the outstanding amounts is unlikely. Once you’ve done that, you ought to write those receivables down in the sense that you’d recognize a provision within the accounts receivable group on the balance sheet to show the amount between what was initially recognized and what you expect to get instead. For an example, if the original amount was 200 CU and now you’d estimate that you’d only get half of it, your provision should be 100 CU. The net receivable is thus 100 CU on your balance sheet.  Continue reading