Recognizing payables to suppliers is crucial in ones’ business. It’s about understanding what you owe to someone else and trust me when I say that they will remind you of it. Regardless however it’s never a good sign if they have to remind you of the payment due and it doesn’t show in good light, never.  Continue reading →

Buying inventory items, i.e. goods to be resold, materials to be produced and manufactored into sellable goods is something businesses do every day. They buy what’s needed to keep the business running and keep track on stock in hand. The accounting entries one normally does for when acquiring inventory items is as follows (note here that we have ignored any tax effects):  Continue reading →

Purchasing things for your company (i.e. materials, supplies or services) creates two types of entries within your company’s accounting – a reflection of what was bought (e.g. you increase your inventories or expenses) and a reflection of what you used to make the purchase. That is, you’re either going to pay for it later and hence you recognized a payable or you paid on spot and you simply recognize a credit entry onto your respective cash account.  Continue reading →

There are obviously times when you incur an expense, but what if at any given time you’ll be in a position where you would have to reverse the expense. Reversing an expense is something that’s quite a simple and straightforward action in a company’s accounting routine, however since such entries don’t come by as often as the regular expense entry, it’s worthwhile to explain how they would be done.  Continue reading →

Why would you have controls over purchasing and payables? Do you think purchasing is an important function to your business?  Continue reading →

How would you recognize a payable for a property, plant and equipment item? You essentially bought from your supplier an item you’ll be using for a longer period to either produce something or generate economic benefits for your business and now you have to recognize the purchase within your accounts.  Continue reading →

What is ‘payable to a supplier’? First I would like to define the term ‘supplier’. In practice for some reason it creates some confusion and I have seen often enough some people thinking you sell your goods to your supplier. Whilst this may happen, it’s a case your supplier becomes your client at the same time. ‘Supplier’ is someone you buy goods and/or services from; they supply you with goods and/or services you require. For argument purposes, your ‘customer’ is someone who buys goods and/or services from you. So now that’s clear we can move on.  Continue reading →