The Extended Trial Balance
Can you complete the extended trial balance below? Pay close attention to the adjustments! AAT Level 3 | The Training Place
Irrecoverable Debt
Many businesses sell their goods and services on credit and this gives rise to the riskof one or more customers not paying after they have received the goods or services.This may not be a regular occurrence in businesses, but where the goods or servicesof a business are offered to its clients on credit, the risk … Read More
De Minimis Limit
A business cannot normally recover input tax on VAT exempt supplies. However, if the exemptinput tax is below the de minimis limits it can be treated as fully taxable and so, the full input taxon exempt supplies can be reclaimed. Where the exempt input tax is insignificant it can be treated as if it were … Read More
Payback Period
The payback period is the length of time it takes to recover the amount of cash inflow investedinto a capital project. It is the time it takes the cash inflows from a capital investment project toequal the initial cash outlay. It is usually expressed in years. It is a way of assessing the viability of … Read More
Capital vs Revenue Expenditure
Capital expenditure occurs when a business spends money in purchasing non-current assets for the business operations or when it spends money in adding value or improving an existing non-current asset. This will include delivery and legal costs in acquiring the non-current assets. Non-current assets are items owned by the business which have some longevity andwill … Read More
Labour Costs – Bonus Schemes
A bonus payment is an extra payment made to an employee as a reward. The basicprinciple of a bonus payment is that the employee is rewarded for any additionalincome generated or savings in cost to the organisation. Bonuses may be paid to employees for a variety of reasons. An individual employee, adepartment, a division or … Read More
Labour Costs – Piece Rate with Guarantee
This gives the employee some security if the employer does not provide enough workin a particular period. The way that system works is that if an employee’s earnings forthe amount of units produced in the period are lower than the guaranteed amount thenthe guaranteed amount will be paid to the employee. Illustration: Fernando is paid … Read More
Labour Costs – Output Related Pay
This is also known as payment by results or piecework. This is a direct alternative totime related pay. Employees paid under an output related pay method are paid a fixedamount per unit of output achieved, irrespective of the time spent in production. As far as an employee is concerned, payment by results means that they … Read More
Labour Costs – Overtime Premium
This is the amount over and above the normal hourly rate that employees are paid forovertime hours worked. It is common to be paid an enhanced rate for any overtimehours worked, for example, an individual may be paid £20 per hour and any overtimehours worked can be paid at time and a half rate, this … Read More
Labour Costs – Time Related Pay
Employees paid under a time related pay method are paid for the hours that theyspend at work regardless if the amount of production and output that they achievewithin that time. Time related pay employees can be split into salaried employeeswho may be paid monthly or weekly for a specified number of hours per week orhourly … Read More