BS ECONOMICS ACCOUNTS DOUBTS

[TheZodiac]

And excellent notes on the 3rd unit of economics government failure

You can post the question you're feeling difficulty in, I'd try my best to answer.

 

[TheZodiac]

A detailed explanation of Depreciation

Depreciation is the fall in value of a non-current asset due to;
1) Wear and tear (Use of the asset)
2) Time period in which better models are available
It can be calculated by 3 methods:
1) Straight line method (It's for assets which usually do not get updated due to technological advancement such as land, property etc.)
2) Reducing balance method (It's for machines and gadgets which lose their value or time period)
3) Re-valuation method (For lose tools etc)

 

[sayanora]

Can any of ull explin hw to find bad debts in a non profit organisation

 

[David Hussey]

Can any of ull explin hw to find bad debts in a non profit organisation

do you have a link to ur question?

 

[Romeo Sheikh]

A detailed explanation of Depreciation

Depreciation refers to the fall in the value of a non current asset over the period of its useful life. It is recorded as an expense in the income statement. Its normal or opening balance is on the credit side since it reduces an asset. It is measured using 3 main methods i.e. Straight line, Reducing/Diminishing balance, and Revaluation method.

 

[Romeo Sheikh]

Can any of ull explin hw to find bad debts in a non profit organisation

Just apply the percentage of bad debts on total trade receivables e.g. 2% of debtors if this is the case otherwise it may also be given in the question which u may only have to include in the incomes and expenditures account.

 

[azaanahsan]

A detailed explanation of Depreciation

If u want to understand dep. in detail first, u should understand revenue and capital expenditures. Revenue expenditures are expenditures within an accounting period and are written off in Income Statement ( Statement of Financial Performance ) whereas Capital expenditure are for more than one accounting period and are written in Balance sheet ( Statement of Financial Position). Now when u purchase Non-current asset i-e a capital expenditure because it can be used for more than one accounting period so it goes to Balance sheet. (SOFP), now suppose u purchased building in 2010 which has cost of 100,000 and life of 5 years, now this building will be written in Balance sheet(SOFP) because it can be used for more than one accounting period, now after one accounting period when u hav used it for that accounting period, part of that capital expenditure will be converted into revenue expenditure as u used it for 1 accounting period, that accounting period for which u hav taken up benefit will be considered as revenue expenditure and u will write that in Income statement as an depreciation. (100,000/5 = 20,000) .... this 20,000 is conversion of capital expenditure into revenue exp. as u used building for that period.. now in balance sheet the net book value of that asset will be 80,000 (100,000 - 20,000). After 2nd accounting period u will again convert capital expenditure into revenue exp. So again (100,000/5 = 20,000)this 20,000 will go to I/S as dep. n in B/s u will write Building as (100,000 - 40,000 = 60,000)...u can use diff. methods for converting cap. exp into revenue exp.... which are called methods of dep. ...... hope u understand ...... if u hav an doubt u can ask again