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The accounts department carries out several different tasks and activities with the aimof keeping accurate records of the company’s operations in monetary terms. It has tokeep records of all the business operations which is used to prepare the statutoryfinancial statements, which will be made up of the statement of profit or loss and thestatement of … Read More
Accounting Equation: ASSETS – LIABILITIES = CAPITAL QUESTION: Anushka began a sole trade business on 1 January 20X1. During the first month of trading, the following transactions took place: She started the business with £5,000 of cashShe took out a loan from the bank of £10,000She purchased a van for £12,000 cashShe purchased 100 units … Read More
DISCHARGE OF CONTRACTS Discharge of contracts implies a termination of the contractual agreement and the contract obligations come to an end. Discharge by performance Discharge by breach Discharge by performance is where all parties to a contract have fulfilled their part of the terms to the contract agreement, so all primary obligations will cease. Discharge … Read More
REMEDIES FOR BREACH OF CONTRACT Remedies for breach of contract include: · Action for price · Action for damages Action for price: Where there has been a breach of a contract of sale, the seller can sue the buyer for the price of the goods. Action for damages: Where there has been a breach of … Read More
WHAT ARE PRE-INCORPORATION CONTRACTS? These are contracts entered into by a third party on behalf of a company which has not yet been formed. A pre-incorporation contract is binding on the third party who is acting on behalf of the unformed company. · A pre-incorporation contract is a contract entered into on behalf of a company … Read More
WHAT ARE THE TYPES OF CONTRACTS? There are different types of contracts and these include: · Void contracts Contract that cannot be enforced by law because it involves an illegal act or an agreement which is impossible to execute · Voidable contracts Contract that is valid but can be … Read More
WHAT ARE THE ELEMENTS OF A CONTRACT? For a contract to be established, the following have to be existing: · Offer and acceptance (an agreement) · Consideration · Intention to create legal relations · Capacity OFFER: A definite expression of willingness to be held accountable on specified terms without any further changes to the agreed … Read More
WHAT IS A LIABILITY? Liabilities are things that are owed by the business which are the obligations or debts of the business. These could be classed as: · Non-Current liabilities · Current liabilities Non-Current liabilities are obligations that are owed by the business over a long period of time usually for longer than one year … Read More
WHAT IS AN ASSET? Assets are things that are owned by the business which are used to produce economic value to the business in meeting its debts and other commitments. These could be classed as: · Non-Current assets · Current assets Non-Current assets are things that are owned by … Read More
Absorption of overheads is the process by which the total cost of a production centre is charged to the cost units within that centre. Absorption of overheads is charged to cost units based on an absorption rate and this is calculated at the beginning of the period based on budgeted activity and budgeted overheads. There … Read More
