Archive for December, 2007
Accounting For Hire Purchase In The Purchaser’s Book
This article deals the Accounting treatment of Hire Purchase Agreement of Purchaser:
In the Purchaser’s Books
Goods on hire purchase are treated as Assets upon receipt. The cash price is recorded as Cost of Assets re: Fixed Assets and
The interests on hire purchase are charge to the Profit & Loss account as revenue expenditure over the period [...]
December 12, 2007
Tags: Hire Purchase, Hire purchase accounting Posted in: Hire Purchase 
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Hire Purchase, Credit Sales And Rental Agreement
This article deals with the features of Hire Purchase and the differentiation between Hire Purchase, Credit Sale and Rental Agreement:-
Features of Hire Purchase
When goods are purchased under a Hire Purchase Agreement:
Vendor of the goods leases the asset to the purchaser on the terms that the purchaser shall pay to the vendor hire charges equivalent to [...]
December 12, 2007
Tags: Credit sales, Hire Purchase, Rental Posted in: Hire Purchase One Comment
Short Term Decision Making-Special Order(Part5)
Sometimes, when a company has spare production capacity, it is willing to fulfill SPECIAL ORDERS for non-regular customers. Normally, the prices quoted are lower than those regular customers.
So when do a Company Accept or Reject a Special Order?
Generally, the rule is to accept the order as long as the incremental revenue is MORE [...]
December 11, 2007
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Short Term Decision Making:Make Or Buy (Part4)
At times, management needs to decide whether to manufacture the product or to buy the ready made from other companies.
The following are some reasons to buy from other companies:
Flexibility to meet urgent demand of customers;
Overcome limiting factor problem ( Part 3);
Concentrate [...]
December 11, 2007
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Short Term Decision-Limiting Factor(Part3)
As a result of limited supply of resources constraint, a company normally cannot produces as many products as it wish.
The limited supply of resources can be in many forms like limited cash, labor time, material/machine availability and others.
In line with the limited resources, the production manager therefore needs to plan the production mix in order [...]
December 11, 2007
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Short Term Decision Making: Other Relevant Cost Techniques(Part2)
The following are some other cost techniques which are useful to management’s decision making:
Opportunity Cost
Represents the opportunities which have been forgone by following one course of action rather than an alternative course.
The opportunity cost in this case is the [...]
December 11, 2007
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Short Term Decision Making: Understand Relevant Costs(Part1)
It is important that Management needs to have sufficient and relevant information to make the correct decisions. Hence, the need to understand relevant costs.
What really is Relevant cost?
A relevant cost relates to future expected costs that will differ with each alternative used.
Because [...]
December 11, 2007
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