Allowance for impairment of trade receivables

Allowance for impairment of trade receivables

What is Allowance for impairment of trade receivables? The allowance for impairment of trade receivables estimates the percentage of accounts receivable that are expected to be uncollectible. The percentage estimated is usually based on historical credit loss experience An allowance for impairment of trade receivables is considered a “contra asset,” because it reduces the amount…

A Complete Guide to Understanding Cost of Sales

This article uses the periodic inventory system to account for cost of sales Photo by Adam Kring / Unsplash If you wonder what makes sales different from the cost of sales or COS, then you are on the right page!  In finance and accounting, sales are revenues produced by a business from rendering services or…

2011 GCE O’ Level Principles of Accounts (POA) Suggested Solutions!

2011 GCE O’ Level Principles of Accounts (POA) Suggested Solutions!

So guys, it’s a few more weeks before your O’s are finally over! Yes, I know some of you have been waiting long for the suggested solutions. Braving thunderstorm and huge downpour some slight drizzle, I’ve been able to receive both Paper 1 and Paper 2 of 2011 GCE O’ Level POA Paper yesterday afternoon,…

INTERNATIONAL STANDARDS & ACCOUNTING TERMINOLOGY

INTERNATIONAL STANDARDS & ACCOUNTING TERMINOLOGY

The terminology for accounting varies across different levels of study. Those of you who have moved on to study accounting at tertiary level would agree – terms like debtors and creditors have a different meaning in ICCI, CAT, ACCA and other accounting diploma/degree programs. The term Debtors used for O’/N’ Level, for example, becomes Accounts…

Source Document – the Returned Cheque Advice

Source Document – the Returned Cheque Advice

Image courtesy of The Association of Banks in Singapore Reasons for Dishonoured Cheques Whenever a cheque given to a business bounces, the bank will send notice to the business that the customer/ debtor’s cheque was dishonoured. The cheque may not have been cleared for one or more of the following reasons: 1. There is insufficient…

5 Reasons Why Principles of Accounts

5 Reasons Why Principles of Accounts

You just finished your final year examinations and are considering your options. The familiar arts (history, literature or geography) and science  (biology, physics and chemistry) Principles of Accounts (POA) sounds so foreign and you’ have heard from friends that it is boring. But there’s more to debits and credits in POA. “’Double-entry bookkeeping’ is one…

What is the difference between Net Book Value (NBV) and Net Realisable Value (NRV)?

What is the difference between Net Book Value (NBV) and Net Realisable Value (NRV)?

The Net Book Value (NBV), also known as depreciated cost, is equal to its original cost (its book value) less amortisation (not in O’/N’ level syllabus) and depreciation. On the other hand, the Net Realisable Value (NRV) refers to the selling price of an asset minus the expenses incurred in the sales transaction, and in…