Our lecturer mentioned about this in the early lessons on Principle of Accounts..
If the business transactions are on credit terms with cash payments made later, Would you :
1) record the transactions only when cash change hands ?
2) Or record both : i.e. first the credit transactions and then the cash settlements later whn they occur ?
Which will it be ?
The answer is 2!
For better information an for planning and control : The Realisation Concept identifies a transaction as 'realised' when it gives legal rights to the receipt or payment of money or other asset which can be assessed with reasonable certainty.
So when a sale is made a trade debtor (account receivable) is created. When a purchase is made : a trade creditor (account payeble) is created.
Accounts are all about records and records. In studying this subject .. apart from losing some hair .. i realise that it's pretty link to the issue of Faith.
Many times its hard to come to believe until we have something we can see in our hands. The practical .. the logical side of our mind will reason... and think if it can be done. This is also a part of fatih that some people actually tend to forget (including me). Faith ain't blind... but it considers the circumstances 'how improbable or how impossible' and its an assurance that God has taken care of it. Even if we don't receive the cold hard cash... we know that when we do a credit transaction... be it an online transfer of money... or when we tap our EZ-link card when we take public transport.. a transaction of the unseen is made. This is really much like faith. You cant see it.. but something is being taken care in the unseen. Money transaction are taken care of electronically. Our lives are taken care of in the spirit when we put our trust in God. That's why in Jer 29:11 : In the hardness of times.. Jeremiah proclaimed to the people all things will work for the good of those who love God!
Faith is the assurance of things hoped for. The confidence that is put in us when we feel hopeless. It takes us to God's realm .. and tells us it's all been done. God has given us the legal right as christians that we'll inherit the promise of God. If we walk with him.. there is a security like no other. We'll be blessed.
If the business transactions are on credit terms with cash payments made later, Would you :
1) record the transactions only when cash change hands ?
2) Or record both : i.e. first the credit transactions and then the cash settlements later whn they occur ?
Which will it be ?
The answer is 2!
For better information an for planning and control : The Realisation Concept identifies a transaction as 'realised' when it gives legal rights to the receipt or payment of money or other asset which can be assessed with reasonable certainty.
So when a sale is made a trade debtor (account receivable) is created. When a purchase is made : a trade creditor (account payeble) is created.
Accounts are all about records and records. In studying this subject .. apart from losing some hair .. i realise that it's pretty link to the issue of Faith.
Many times its hard to come to believe until we have something we can see in our hands. The practical .. the logical side of our mind will reason... and think if it can be done. This is also a part of fatih that some people actually tend to forget (including me). Faith ain't blind... but it considers the circumstances 'how improbable or how impossible' and its an assurance that God has taken care of it. Even if we don't receive the cold hard cash... we know that when we do a credit transaction... be it an online transfer of money... or when we tap our EZ-link card when we take public transport.. a transaction of the unseen is made. This is really much like faith. You cant see it.. but something is being taken care in the unseen. Money transaction are taken care of electronically. Our lives are taken care of in the spirit when we put our trust in God. That's why in Jer 29:11 : In the hardness of times.. Jeremiah proclaimed to the people all things will work for the good of those who love God!
Faith is the assurance of things hoped for. The confidence that is put in us when we feel hopeless. It takes us to God's realm .. and tells us it's all been done. God has given us the legal right as christians that we'll inherit the promise of God. If we walk with him.. there is a security like no other. We'll be blessed.
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