What is Cash Flow from Financing Activities? Cash flow from financing activities (CFF) is a part of a companies cash flow statement. It shows the flows of cash that are used to finance the company. Examples of financing activities include dividends and transactions involving equity and debt. Why is Cash Flow from Financing Activities Important? …
Writing off Accounts Receivable is done when a client is unable to pay the money they owe us. This often happens when a client goes bankrupt. There are two methods used when writing off bad debt. The direct write off method or the bad debt provision method. Examples When writing off accounts receivable there are …
Accrued Income is money that has been earned but has not yet been invoiced/received. Accrued Income is also known as Accrued Revenue. How does Accrued Income Work? Most companies use accrual accounting. IFRS and GAAP (the main two accounting principles and standards in the world) prefer companies to match revenue and costs in period that …
Working Capital = current assets minus current liabilities So you may be wondering what is Working Capital? It is the difference between a companies current assets (cash, accounts receivable etc) and it’s current liabilities (accounts payable etc). Working Capital is used to review a company’s short term financial health, by looking at it’s liquidity and …
Maybe you’re thinking of doing an Accounting and Finance degree or are fancying a career change. One question that often comes up is accounting hard? It’s a very valid question and is not an easy answer. Usually it’s not the easiest job, and that’s why it pays well. You have a lot of responsibility for …
What are Net Fixed Assets? Net Fixed Assets is a valuation of the net book value of all fixed assets. This is done by taking the historical cost of the the assets and subtracting depreciation. Think of a car that you have purchased. You may of bought it new for $20k. Two years later that …
What is a Permanent Current Asset? A permanent current asset is the minimum amount of current assets a business needs in order to continue operating. Cash, accounts receivable and inventory being examples. A certain amount is needed for the business to carry on working. As an example, a business may not have enough cash or …
Trade Creditor Meaning Trade Creditors (also know as Accounts Payable or Trade Payable) are when you have made a purchase with a supplier but not yet paid them. So while a Trade Debtor sits on our Sales Ledger, a Trade Creditor sits on our Purchase Ledger. As an example, say we purchased some new desks …
Trade Debtors Meaning Trade Debtors (also known as Accounts Receivables or Trade Receivables), are clients that have made a purchase on credit, and have not yet paid for the product or service. As an example a client may purchase ten laptops from your Computer Hardware business for £5,000. As is usual for your business, you …
Sundry debtors are clients/customers that rarely make a purchase on credit. They will show up as a single line on your Trade Debtors report. For example say your business was a Corporate Travel Agent. You may have clients who book hundreds of flights and hotel stays with you a month. These clients would all have …