By G J Taylor (auth.)
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Extra info for Accounting for Business Organisations: A Practical Approach
B) The accounts confirm the suspicions of the partners that the business is running into difficulties. With pcrfners ' drawing in excess of £21000 and an overall net loss of £1893, the business must have encountered some severe difficulties which resulted in this turn-round. The partners will need "to act fast to identify the causes and take remedial action where necessary and feasible. Since all three partners have been drawing on their capital, their finoqclc] stake in the business has fallen substantially and their liquidity position is extremely we~.
Since the sales are being recognised in the current year, payments which fail to materialise from these sales should also be recognised in the same period. Otherwise, next year's profit will be understated by the bad debts from the current year. Essentially, there is no difference between the general reserve and undistributed profits. It is a matter of opinion whether or not un- appropriated profits are put immediately to the general reserve. In theory, profits in a general reserve are still available for appropriation.
2. Sales rep's car Linked to mileage 3. Microcomputer Straight-line High rate of obsolescence therefore limited life. g. educational or home computing. 4. Packaging machine Linked to production, physical deterioration Derived demand for product, therefore likelihood of product obsolescence as well. 5. Photocopier Linked to number of copies cf . 6. Lease on land and buildings Straight-line Function of time - known length. 1. Inland Revenue (for tax purposes) 32. Supermarket Cost (base) FIFO (cost method) Category(final figure) Varied, fast-moving consumer goods (fmcgs).
Accounting for Business Organisations: A Practical Approach by G J Taylor (auth.)
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