This is where the business sells its accounts receivables to a business that specialises in debt collection. The debts will be put at a reduced amount by the factoring business, but the advantage is that it provides an injection of cash into the business with funds to continue operating and stops the problem turning into a solvency issue. Woolworths began using a factoring company to collect its accounts receivable at the start of 2015. This is a low-risk funding option for Woolworths and allows the business to meet its financial objective of liquidity. It saves the business time and effort involved in chasing debtors and allows management to focus on the prime function of grocery retailing, although it costs Woolworths a percentage of repayments to do this.
This would be important for accounts receivable - money that is owed by a customer for products/services. Representing a company in small claims court requires one to be familiar with the law and how it relates to accounting practices. In the Mack v. Edenwold Fertilizer Services Ltd. case, if Mack had a knowledgeable accountant that was familiar with the law, he may have been advised not to sue as the illegality of the situation would have resulted in a loss. In turn, this advise would have saved Mack both time and
Johnson will be personally taxed on all of Smithons income. This has the favor of eliminating the double taxation commonly associated with a C-Corporation. However, it will improver Johnsons current tax liability. there is usually no benefit to an S-corporation for a wealthy singular who is already in the go on tax bracket. S-Corporation income tends to favor start-up businesses and taxpayers with humble income, because the corporation is taxed at the individuals sink personal income tax rate.
Operating Budgets Paper Arin Lawson February 23, 2015 SEC/370 “A budget tells us what we can't afford, but it doesn't keep us from buying it” William Feather Operating budgeting helps to establish and achieve the costs and revenue to run your business. When having a budget plan it helps you follow a plan to control your day to day income for your business. There are two poplar budgeting strategy’s that are used by many companies; Incremental budgeting and Zero-based budgeting. There are also pros and cons to these budgeting strategies. Incremental budgeting is when you take last year’s budget and add more or less to it depending on what you’re looking to do with your budget for the year.
Taxpayers have the incentive to try to pay as little tax as possible in order to maximize their wealth. The IRS may choose to negate certain matters under the Sham Transaction Doctrine. Corporate taxation law is constantly growing and adapting which make the validity of these transactions even less clear.
That is what makes the company so compliant with the debt that they owe. “ Duke Energy is in compliance with all covenants related to its debt agreements.” (Duke Energy corp., 2010) This can be a very good thing, that way the company has time to pay off debt and not earn more then what they already have. Ratios are used so that companies are able to meet short-term debt. Current ratios and quick ratios are liquidity ratios that help signal complications. Current ratios show relative amount of working capital, while quick ratios show the amount of quick assets by current liabilities.
The common methods of a chart of accounts include Accounting types – assets, liabilities, equity, revenue, expenses and revenue, followed by order of liquidity, and the account numbers. How does the order of liquidity apply to the balance sheet? The order of liquidity exclusively applies to those accounts in the balance sheet that can be liquidly turned in cash, expenses and revenue accounts are exempt. a good example of liquidity are U.S. bonds and common stocks, some believe that real estate might be a good one , but it is not , property prices can be under valued forcing to sale under actual
Although paper monies, such as certificates, stocks, currency, or bonds, are normally kept in financial institutions because of safety or convenience, the popularity to maintain possession of valuables is on the rise. The lack of hassle and ease of liquidity are two reasons for the rise. Standard of Deferred Payment - Money can be used to purchase goods and services, and pay at a later date or with a series of payments. For example, some furniture or electronic stores offer “buy now, pay later” specials as an incentive for purchasing. Federal Reserve and Monetary Policy The Federal Reserve is considered independent because, although it is accountable to Congress, its decisions do not have to be ratified by Congress or the President.
Cash flow is more vibrant and holds to the true value. Cash flow is concerned with the movement of money in and out of a business. The concept of accounting profit can be somewhat narrow with its results only looking at income and expenses at a certain point in time and is taxable. By comparing the information provided from the two reports the free cash flow information from will provide the company with a much truer understanding how the project will be performed. Comparing the company’s net income to its actual cash generated, an investor can determine whether the company is more aggressive or conservative in accounting for its performance.
When an individual passes away and before his or her heirs receive any money all debts must be paid, unlike the government (Colander, 2010). Another difference between government and individual debt is that the government can create money to pay off debts if needed whereas an individual cannot. This week’s objectives gave us, a better understanding of how deficits and surpluses work also how deficits are not always bad. It also taught us how difficult it can be for the government to pay off debts and to come up with a budget that will lead us out of a