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 of the Hire Purchase Agreement

Accounts Required in The Purchaser’s Books: Continue reading Accounting For Hire Purchase In The Purchaser’s Book

December 12th, 2007 | Tags: , | Category: Hire Purchase | 3 comments

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 the cash purchase price plus interest on the outstanding balance.
  • The legal title to the assets does not pass to the purchaser until he has paid his final installment and exercise his option to purchase
December 12th, 2007 | Tags: , , | Category: 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 [...]

December 11th, 2007 | Category: Short Term Decision Making | Leave a comment

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 [...]

December 11th, 2007 | Category: Short Term Decision Making | Leave a comment

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 [...]

December 11th, 2007 | Category: Short Term Decision Making | Leave a comment
 
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