When a partnership is taken over by a limited company, the partnership is considered as dissolved and the business is sold as a going concern to the limited company. Accounting entries in the Purchaser’s book ( limited company) is similar to the sole trader’s business. Refer to Part 1 re: purchase of a sole-trader business.As … Read more
This type of purchase of business is usually a mere “conversion” of a sole-proprietorship to a limited company where the seller (sole-proprietor) will be allotted shares in the Limited Company. In the Purchaser’s books, the following steps need to be taken: (a) transfer all assets & liabilities into the Purchase of Business a/c (b) the … Read more
Refer to the Category on Goodwill Valuation, you will see many methods of computing goodwill. This article deals with one of the normal way of computing or valuing goodwill particularly in a partnership whether at the time of a new partner, or the retiring or death of an old partner. Goodwill Valuation: Average annual net … Read more
This article deals with how goodwill normally arises and what does goodwill means. Goodwill normally arises : When a partnership admits a new partner, two important things are considered: Profit adjustment whether in terms of existing and future profits and Goodwill Also, besides new partner(s) being admitted, the death or retirement of an old partner … Read more
Earlier article showed the financial impact of the occurrence of Accounting fraud, append below are the different types of Accounting fraud that can be perpetuated. More often these type of accounting fraud are termed as Creative Accounting. Checklist on The Different Types Of Accounting Fraud, Areas and Ways Accounting Fraud Can Happens 1.0 Manipulating Sales … Read more
RETURN TO GLOSSARY INDEX Zero based budgeting Budgeting from scratch, as if the budget is being prepared for the first time. Every proposed expenditure comes under scrunity. The basis of ZBB is the decision packages. Decision packages are prepared for each responsibility centre. The packages describe the various levels of operations that a responsibility centre … Read more
RETURN TO GLOSSARY INDEX Yield The rate of return on investment
RETURN TO GLOSSARY INDEX Waste Unusable materials that have little or no value Weighted average The price used to value issues is the total cost of materials purchased divided by the total quantity of materials purchased. Weighted average A method to account for opening work in process. Under this method the opening WIP costs are … Read more
RETURN TO GLOSSARY INDEX Value added Sales revenue less bought out goods and services. It measure the wealth created by the workforce Value analysis A systematic and analytical technique of analyzing all aspects of a product in order to determine whether costs can be reduced without affecting the quality. Variable budget Refers to as flexible … Read more
RETURN TO GLOSSARY INDEX Under absorbed overhead The amount of overhead incurred exceeds the amount of overhead absorbed Uniform costing The use by many businesses of the same costing methods, principles, techniques and or practices.