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By George Bright

This ebook offers a finished advent to the foundations and perform of book-keeping and accounting. during the textual content, real-life case reports are used to demonstrate ideas. there are numerous useful workouts (with solutions) and actions incorporated. a piece of GCSE questions is given on the finish of the ebook.

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Wilson Sales £ 200 4 June 4 June Cr Bank Discount allowed £ 194 6 Discount allowed 4 June B. Wilson 6 Bank 4 June B. 1 BAD DEBTS This is the expense incurred when debtors fail to pay their debts. In the balance sheet, debtors appear as an asset because it is assumed that anyone to whom credit has been allowed will pay what they owe. Once it is known that a debt is never going to be collected this fact must be shown in the accounts. If it were not then the accounts would not be giving a fair picture of the assets of the business.

It is discovered that machinery purchased for £1 ,000 is now worth £800. 9 INCOMES While all businesses will have to pay for a variety of expenses to enable them to operate, some will also receive income for the services they provide for others. For many businesses the major receipt of money will come from sales of their stock, an item dealt with at the beginning of this chapter. Here we are concerned with those receipts of money which come from sources other than sales of stock. For example, a business may own property which it does not need for its own use but which it does not wish to sell.

In the above account we can now tell at a glance that, when business starts on 11 March, Helen Berry has £2,075 in her bank account. The significance of dating the balance to be carried down one day earlier than the balance which has been brought down is that account is shown as being temporarily closed at the end of business on one day and then reopened, with the same amount, when business begins next day. Where there is only one entry in an account, that is the balance or difference between the two sides.

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