Want A Loan With Bad Credit? Go For High Risk Personal Loans By James Taylor

High risk personal loans are for the people who are facing trouble in getting a personal loan due to their bad credit history.

High risk here is not meant for the borrower but for the lender who is offering his money. People lying under following heads fall in the category of High risk borrowers:

• Borrowers with defaults or frauds made in the past
• Late payment makers
• People with numerous debts with them
• Bankrupts
• Arrears
• Those who have taken CCJ’s or IVA’s in the past.
• Those who change their place of living very often.

Getting a bad credit history is very easy but to get out of it you need to do some hard work. Credit rating agencies such as Experian, Equifax and Transunion continuously do your credit monitoring. They prepare a credit report which reflects all the debts taken and paid by you in the past. You can order this report from these agencies at some cost. You can view your credit report online on their websites. Your credit history is defined here in terms of your credit score. They will also give you advices and tips on how to improve your credit score and how to get a good deal in high risk personal loans.

There is a grading system according to which lenders decide the amount and the rate at which a high risk personal loan should be given. This system define that if your credit score lies between a particular range how much loan at what rate you can get. a score below 600 is considered as bad credit score. However when you make timely payments and clear your debts it ads to your credit score positively.

Proper research is the most important thing which a borrower should do before reaching any conclusion for choosing a high risk personal loan lender. Yes, it may demand you to travel to offices of different lenders, study their quotes and packages. This sounds hectic job but can save lot of your precious money from going out of your pocket. After all why should you pay more when you can get the low rate of interest to repay.

High Risk Personal Loans are flexible loans and can be used for any of the following purpose:

• Debt consolidation – for integration of your existing debts into a single debt. Hence improving your credit score.

• Home improvement – for improvement of home i.e. adding of rooms, new swimming pool in the house, plumbing work or any other modification.

• Loans for buying property or car, boat etc

• Vacation purpose.

• Business requirement of funds for expansion or new venture.

High risk personal loans can give you funds when you are denied by other forms of loan. So get out of all the financial troubles and live your life to the fullest with high risk personal loans.

Resource: http://www.isnare.com/?aid=63871&ca=Finances

Avail Finance On Better Terms At Bad Credit Loans By Peter Taylor

Those people who are reeling under bad credit face hurdles in taking a loan as lenders put hard terms and conditions. Lenders doubt their ability and intention to repay loan. This is not the case, however, when these borrowers avail bad credit loans as the loan is given hassle free manner and even at lower rate of interest. The borrowers can utilize bad credit loans for a number of purposes such as making various payments towards education, wedding, home improvements, buying a vehicle or even for paying off previous debts.

A borrower is labeled as having bad credit when there are at least one or two cases of payment default or County Court Judgments against him or her. This reflects in the credit report of the borrower and this in turn adversely impacts the credit score. On FICCO scale, credit score measures from 300 to 850. A credit score of 720 is labeled as risk free and safe for giving loan while score of 580 and below is considered as bad credit.

Before you rush to the lender to take bad credit loans, you should make efforts to improve your credit score. Consult an expert and ensure the report is error free. If easy debts can be paid off, the credit score goes up and credibility that you are serious towards paying back loan improves.

If you own a home or any property, availing bad credit loans becomes easier. You place the property as collateral with the lender. This way bad credit will not count much as the loan has been well secured. On offering collateral, the borrower can even ask for higher amount of loan and at lower interest rate. For secured bad credit loans, the lenders usually provide £5,000 to £75,000 to the borrowers. In case of greater amount, lender will evaluate equity in the collateral. Higher equity enables in getting higher loan.

One advantage of secured bad credit loans is that it comes with lower interest rate as compared to the unsecured one. If the borrowers take advantage of growing competition amongst lenders, the interest rate can be lowered further. Secured bad credit loans have flexible repayment term ranging from 5 to 30 years. You should choose repayment term according to your paying capacity. Remember that the higher term will result in lower outgo towards monthly installments.

Unsecured bad credit loans are availed without offering collateral to the lender. The borrower should give proof of his steady income source and financial standing if any. This will ensure better terms and conditions for getting bad credit loans as otherwise unsecured loans come with higher interest rate and loan amount is smaller. The repayment term also may be shorter.

Bad credit loans should preferably be applied online so that you have number of loan offers to choose from.

Bad credit loans, if taken carefully, can improve your financial health besides meeting immediate requirements. You should pay monthly installments in time to avoid any pitfalls.

Resource: http://www.isnare.com/?aid=63065&ca=Finances

Accounting Outsourcing Service To Augment Your Business Prospects By Michelle Barkley

Are you unable to keep a tab on the heavy accounting work undertaken by your accounting firm? This is just no reason for anyone to despair about his/her business prospects. Opt for accounting outsourcing service from an outsourcing firm to meet hectic customer demands. Accounting is a seasonal business, which witnesses heavy demand from customers to get their tax returns prepared and pay their taxes timely. This is the time when accounting outsourcing service comes as a boon to accounting firms and CPAs.

Several outsourcing companies deal with accounting and provide their clients with accounting outsourcing services. If you are eager about earning revenue through your accounting business, outsourcing the process is the best source for you. Accounting outsourcing services are offered considering the urgent requirements of CPAs and accounting firms to meet customer demand during the tax season in the US.

To run your accounting business successfully, you will have to choose a good outsourcing company which meets all your requirements. Take a few minutes out of your busy schedule to scout the best accounting outsourcing service provider to work for you. The World Wide Web is the best source for information regarding bookkeeping outsourcing service.

While researching for a good outsourcing company, it is very essential to check out the different features provided by the company. See the different types of security features which are put in place for protecting customer’s financial security and personal identity by the accounting outsourcing company. In this age of advanced communication, it has become all the more important then ever to maintain strict secrecy about customer’s finical details and personal identification. Customer security must be of major concern for any outsourcing company.

Compare the cost offered by different companies for doing accounting outsourcing work. Opt for the firm which provides you good quality service at an affordable price. Sometimes however compromising on the price for the service offered to you can actually spell loss for a business. This is to say that always the highest price does not guarantee the best services and vice versa. So you must undertake careful considerations before you actually choose a company for doing the outsourcing work for your firm.

You can get many benefits and enjoy peace of mind by outsourcing your accounting work to an outsourcing firm. Accounting outsourcing service work is done by trained professionals in the developing countries. This means the cost of labor is low compared to other places. Professionals in developing countries are highly qualified, but lack job openings. So by accounting outsourcing your customers can get their work done by highly qualified professionals, without spending an extra cent.

Another benefit of accounting outsourcing service is that if you are at anytime not satisfied with the work done, you can fire the accountant and hire new ones for doing the job. With plenty of opportunities available, you will not find any dearth of talent and manpower in this field. There are plenty of opportunities open for you to explore on the internet.

Accounting outsourcing service spells instant success for a business. The simple reason for this is the reduced cost of the services provided. By accounting outsourcing service the entire method of accounting is made cost effective and simple for CPAs and accounting firms to handle.

Resource: http://www.isnare.com/?aid=62634&ca=Finances

Tax Planning For Non-US Citizen Spouses By Kreig Mitchell

Globalization and advances in technology have brought created a very mobile population. This mobility has brought with it a number of international tax planning opportunities and pitfalls. For wealthy United States citizens who are married to non-United States citizens, failing to plan for the loss of the estate and gift tax marital deduction is one of the most frequent pitfalls.

Generally gifts between spouses qualify for a 100% gift tax marital deduction. Gifts to non-spouses are not subject to gift taxes if the amount is less than $12,000 per year (assuming that the US citizen has consumed her $1,000,000 lifetime gift tax exclusion). On the other hand, gifts by a US citizen to a non-US citizen spouse do not qualify for the gift tax marital deduction. Instead, gifts from US citizens to non-citizens (be it a spouse or someone else) are not subject to gift tax if the amount is less than $120,000 per year.

Transfers between citizen spouses at death qualify for an estate tax marital deduction. Transfers to non-spouses at death do not qualify for this deduction. However, the decedent spouse can transfer up to $2,000,000 (in 2006) at death to a spouse or non-spouse citizen or non-citizen estate tax free.

As the above rules provide, it is often advantageous for wealthy US citizens to implement a lifetime gifting program for the benefit of non-US citizen spouses. If taken full advantage of, this could result allow $120,000 to be transferred to a non-citizen spouse free of gift tax. This annual gift is in excess of the citizen spouse'’s $1,000,000 lifetime gift tax exemption. These amounts can be even greater if the citizen spouse transfers property to the non-spouse that qualifies for a gift tax valuation discount (such as shares or an interest in a business that is not marketable or where the non-spouse does not gain control of the business).

For most taxpayers, these lifetime gifts should be sufficient to reduce the US citizen's taxable estate below the $2,000,000 estate tax exclusion amount. In the event that the couple will still incur a federal estate tax upon the demise of the US spouse, the couple might consider establishing a qualified domestic trust or QDOT. The QDOT is simply a trust that, if the requirements are met, allows transfers at death to the trust for the benefit of the non-citizen to qualify for the 100% estate tax marital deduction. Generally to qualify as a QDOT a trust must have at least one US trustee, no distribution (other than income) can be made unless the US trustee can withhold the applicable US taxes from the distribution, and the executor must make an irrevocable QDOT election.

Unfortunately many taxpayers fail to properly account for inter-spousal transfers that they make during their lifetime and the fail to plan for transfers to non-citizen spouses upon their demise. This often results in the spouses, under state law, owning property acquired or earned during marriage jointly. In this situation, if the surviving non-citizen spouse cannot prove that they contributed to acquiring or improving the property, the full amount of the jointly owned property may be included in the US citizen's estate - resulting in a significant US estate tax liability.

Ideally the citizen spouse's estate documents would provide a QDOT that would receive any assets that the non-citizen spouse disclaimed. This would permit the non-citizen spouse to determine whether he or she would like to accept some or all of a transfer from his or her US spouse or to allow some or all of it to pass to the QDOT. The non-citizen spouse might also be able to become a US citizen prior to the US citizen spouse's estate tax return is filed (which is generally due nine months after the spouse's death) - even if the non-citizen spouse becomes a US citizen after the US spouse died. If these options fail but the assets pass to a trust for the benefit of the non-citizen spouse, the trust may be reformed so that it qualifies as a QDOT. In the US states that permit common-law marriage, US citizens who meet the state common law marriage requirements may be able to successfully demonstrate that they are married, in order to reform a non-QDOT trust to be a QDOT trust.

If these rules are not complex enough, life insurance, retirement and employee benefits can present a whole host of other complexities. Taking the time to properly plan for these transactions can significantly reduce the tax liabilities and help transition the transfer of assets from the US spouse to the non-citizen spouse.

Resource: http://www.isnare.com/?aid=62817&ca=Finances

5 Benefits Of Student Loan Consolidation By Ricky Lim

Are you sick of paying interest on your monthly student loans with no end in sight? Afraid of cash-flow problems that may prevent you from paying your student loans on time? I know I was and there is a solution to this problem. It is called student loan consolidation.

What is Student Loan Consolidation?

Student loan consolidation simply means consolidating all your student loans into a single loan with a monthly payment plan. Effectively, all your previous student loans are written off and a new student loan is created which you have to pay off monthly.

Benefits of Student Loan Consolidation

Here are some of the benefits of student loan consolidation

1. Lower monthly payments

By consolidating all your student loans into one loan, you only need to pay off one loan monthly instead of several student loans monthly. Thus, your monthly payment is lower

2. Pay only one loan monthly instead of several student loans monthly

It is a lot easier if you have to manage only one student loan instead of several student loans with different payment deadlines. Also, sometimes with many student loans, you may ended up forgetting to pay one student loan.

3. Low, fixed interest rate

By consolidating your student loans, you will be able to take advantages of low, fixed interest rates. Currently, by law, student loan consolidation rates cannot exceed 8.25%. Furthermore, national interest rates are at a 40-year low therefore this is a good time to get one.

4. No credit card check or processing fees

No credit card check is required during the application of a student loan consolidation. The payment plans and terms are usually quite flexible in that they can customize it according to your financial standing.

5. Make monthly student loan payment electronically

While it is not necessary to make payment electronically, most lenders will knock 0.25% off your student loan rates if you make payment electronically. Also, using direct debit from your bank account will prevent you from forgetting to make a payment.

Sometimes it can get quite confusing as to the qualification of applying for a student loan consolidation. The official stand from the government is that students who are still in their grace period or who are still studying in school may qualify for government student loan consolidation

The government student loan consolidation nowadays are quite competitive compared to private sector, therefore I would recommend going for a government student loan consolidation. With so many benefits of getting a student loan consolidation, it is quite obvious to save money in the long run is to get one.

Resource: http://www.isnare.com/?aid=62389&ca=Finances

Refresh Yourself With Short-Term Holiday Loans By Tim Kelly

Has tedious timetable hemmed you in boredom?

Annoyed with monotonous activities?

Then why not you go for a holiday to refresh yourself? Don’t think about money. Holiday loans are there to tackle your financing part at the time of holidaying.

Holiday loans are mainly provided on short term basis that are obtainable for 2-5 years along with an attractive package ranging from £3,000-£25,000. Two types of short term holiday loans are available in loan market-secured and unsecured holiday loans. Obviously, collateral is required to avail secured one, on the other hand to obtain unsecured holiday loans, borrowers do not need to pledge any collateral against the loan amount. But, the rate of interest varies. The presence of collateral enables borrowers to obtain secured holiday loans at lower interest rate. Since collateral is absent in unsecured loans thus the rate of interest is high on these loans.

Short-term holiday loans are the best partner for holidaying. How? Because, these loans cover all travel related expenditures during holiday. Ticket booking, hotel charges, meals, miscellaneous expenses… holiday loans take care of all expenses of trip.

Good news for the borrowers with poor credit score, as holiday loans are also available for them. Yes, bad credit scorer like CCJs, IVAs, defaults, arrears, discharged bankrupts can be bedecked with short term holiday loans.

At the same time, individuals are advised not to be an extravagant with these loans, as limitless expenses at the time of holidaying can put you in danger in future. Always remember, you will have to pay back the loan amount. Hence, calculate how much you need for holidaying, check that whether you are capable to pay back the amount or not, be sure about your financial status and then apply for a loan.

However, easy availability of short term holiday loans has made it popular among borrowers. Of late, many lenders like financial institutions, banks are providing holiday loans on short term basis. Online holiday loans also have emerged as a good option, as different lenders provide these loans over the internet. Not only loan related information, you can get useful information about different places, hotels over these sites. At last needless to say, do compare different loan quotes of various lenders before applying for a short term holiday loans.

Go for a holiday and refresh yourself- it is very easy to say but without money arranging a holiday trip is merely an illusion. In such cases, holiday loans are perfect for turning your dream destination to your next holiday destination. These loans are provided on short term basis, thus you do not need to pay your debt for a long time.

Resource: http://www.isnare.com/?aid=62813&ca=Finances

Enjoy Financial Freedom With Adverse Credit Secured Loan By Peter Taylor

You are a victim of bad credit history and are facing the problem in applying for a loan. But, if you are homeowner then don’t fear. You can enjoy the financial freedom until adverse credit secured loan is there.

Before going for such kind of loan, one should be cautious of phrases such as “no cost to you”, in the sense that it may not contain any unfavorable condition that can worsen the credit position. The person should go thoroughly through all the terms and conditions of the contract and should ensure that he understand all the fees he is paying.

The person can use adverse credit secured loan for consolidating his debts or buying a car or home or any other purpose or as he wants.

Some people think that there are not many lenders who provide adverse credit secured loan. But now many lenders are available in the market that offer loan at very competitive prices. If the person is finding difficulty in locating such lenders then the research is the best way to locate them. Research is the process through which the person can get the best deal. It can be done by only surfing through internet. This will enable him to get different loan quotes from various lenders which will make the comparison easy. And thus will help him to choose the best lender that suits his needs.

Now the bad credit score doesn’t come into the way of getting a loan once the borrower has decided to keep his property on collateral. The collateral placed gives a sense of security to the lender against any missed repayment. A person can borrow ₤5000 to ₤100000 and it can be repaid back in 5 to 25 years depending upon your amount being borrowed. But one should avoid long period of repayment. It will in turn help in improving your credit score. This will help you in getting the loan on easy terms in the future.

Interest rates charged from the borrower solely depends upon the amount, credit history and the equity of the home being offered. Equity can be defined as the difference between the value of the collateral and the borrowing of the loan seeker on the collateral. The high equity ensures the high amount can be borrowed with lesser rate of interest.

At last the person should evaluate the amount that he can afford and the amount he has to borrow. While taking loan the person should not forget his ability to pay off the loan. Because, if there is any missed payment then the lender can realize his money through your asset and it will also worsen your credit score too.

Resource: http://www.isnare.com/?aid=62295&ca=Finances

Helping The Newcomers - New Business Loans By Tim Kelly

No matter in whichever context we talk about the saying that ‘the first step is the hardest” holds true. The same is the case with the business. It does not matter how much experience a person or a body of persons have, it always requires some assistance when we venture into the unknown regions.

Business has tested out the most experienced and the shrewdest ones, so one can imagine that this is not one of the easiest things in life. However one thing that can make it relatively easier is the help from the others. The thing that is most appreciated is the financial aspect of any new step and that is where to help all the new businessmen we have the new business loans.

As the name would indicate the new business loans are available to people who want to start a new business. The new business can be started by a totally new businessman or a businessman who wants to start a new business along with a business which has already been in running.

Since the new businesses are never easy to start off with in addition there is no guarantee of the immediate success, new business loans are available to people with all the support that is required to make them comfortable. The support terms on the part of the creditors includes an option of choosing between a secured new business loan and an unsecured loan. The borrowers can also negotiate better deals which may include things like, the interest rates to be paid, the loan period and other trivial details related to the loan. With these the loan becomes easier to pay off then it usually is. New business loans are available to not only people with good credit but also people with bad credit as well. Considering the tough circumstances the people have to go through business loans offer the chance to start a new career for them. Not only that, new business loans offers them a chance to improve on their credit score as well.

Applying for the new business loans requires the same criterion as it would be for any other loan. And once that is fulfilled all you need to do is apply to the creditor that matches your requirement. The whole process can either be done online or in person depending on the circumstances then and there. After all the formalities have taken place, the loan decision would be made in a few days time.

A new business is test of many traits of an entrepreneur and the new business loans help in aiding the borrower to compete in the market on equal terms.

Resource: http://www.isnare.com/?aid=63902&ca=Finances

Thrive With Your Business With Secured Business Loans By James Taylor

Business is the first choice for earning their living for a major part of people on this earth. Whenever they thought about doing something constructive (like expanding their business or opening a new business) first thing which comes to their mind is where to get the funds from. They spend most of the time in thinking about financing and unable to find funds, finally they drop their ideas. Besides finances, there are lot many things in business which you should think about like planning, management etc. And for finances you can rely on secured business loans.

Secured business loans demands you to offer your home or any other property to back up the loan amount. This means that in case the loan amount is not paid or some default is made in payment, lender can get the possession of the collateral. But being secured, these loans offer a large number of benefits to the borrower such as:

• Low interest rates with smaller repayment installments.

• The interest rate is tax-free.

• Longer repayment period and larger amount to borrow.

• Flexible repayment terms and conditions for repayment.

• Easy availability in the market.

• Reduced paper work.

• Faster approvals (after the valuation of the property is done).

• Online option for faster and better search of lenders.

• Further negotiations can be made for interest rate and terms.

Secured business loans can be used for any of the business purpose. It may include starting a business, expanding business, purchasing machinery and other assets, purchasing of office space, equipments, and furniture or for the most important thing in the business which is smooth and regular flow of capital etc.

You can borrow from ₤50000 to ₤2000000 and even more in certain circumstances. The repayment period is between 3 to 25 years which is large enough to make the repayments without affecting the budget.

So you may be wondering about the how you can apply for a secured business loan. One thing which you need to remember is to carry certain documents with you while filling an application form. These documents include proof of your business, business name and address, length of business, business profile. In case you are applying for loan for starting a new venture you need to mention what business you are planning to open and how will it be successful enough to repay the loan.

Secured business loans can transform your business ideas into actuality by giving you required financial support just when you need it for running your business smoothly.

Resource: http://www.isnare.com/?aid=65480&ca=Finances

Accounts Payable Outsourcing: Things You Need To Check Out By Michelle Barkley

Every individual running a business wants to be free of the burden of paying money which they owe to anyone as soon as possible. Accounts payable literally means the money which a business owes to sellers for products and services which have been bought from them on credit. If not paid in time accounts payable can pile up and spell trouble for any business. If you are finding it difficult to keep a track of the amount of your accounts payable, then get accounts payable outsourcing service from an outsourcing company. This is the perfect way to deal with this condition.

When you are running a business, keeping track and managing of things like accounts payable, can become very demanding and hectic. Nonetheless this is an important aspect of any business process and has to done and done in time. Accounts payable outsourcing services are offered by many companies which deal with finance and accounting outsourcing.

The best way for searching a firm providing accounts payable outsourcing services is through the internet. The internet is a storehouse of information, and all you will have to do go online and search for information. The numerous options which you will find in the internet can confuse you. Take some time out from your busy schedule and do a proper research about the companies offer accounts payable outsourcing to clients. I am sure you want the best services for your business. Get an in depth analysis of the services offered by the firm before you actually decide to take up services from the company.

Make sure to check the security arrangements the company has in place for its clients. See for yourself and find out if the security measures are adequate to protect customers personal identify and financial data. Online security in this internet age is vital and you must never compromise on this aspect. Make checks and cross checks about the security arrangements of the firm providing accounts payable outsourcing, before you actually outsource your work to the outsourcing company.

Accounts payable outsourcing has many advantages. One of the main advantages is that you can save huge amounts of revenue through the outsourcing work. Work is outsourced mostly to developing countries where there is abundance of manpower and labor is cheap. This automatically means that your accounts payable outsourcing work will be handled by trained professionals at a very cheap rate. The revenue which you will save in this manner is the profit for your business.

There are some outsourcing companies which offer free trails for prospective clients. You can check out such companies and get some of your work done under the free trail offer. See for yourself the type of work done, the amount of money charged and then decide if the company is capable of handling your accounts payable outsourcing work or not. If you are not satisfied with one company, there are plenty of others for you to choose from.

Accounts payable must always be handled properly and every account must be in place for you to make payments timely. Piling up accounts payable will only put you under a huge amount of strain. Accounts payable outsourcing is a simple way for you to keep all your accounts in good shape. Go ahead, rest easy and earn revenue for your business by accounts payable outsourcing.

Resource: http://www.isnare.com/?aid=62320&ca=Finances

Cash Advance and the Law

Different States in the U.S. have different laws with regard to cash advance loans. The high interests charged have sent many borrowers to financial ruin. Many States regard these short term loans as usurious loans and declared them unlawful. Other states regulate the rates of interest and lending amounts by putting legal caps on the amounts and rates of interest.

In 35 States in the U.S. cash advances are legal. In 15 States and in the District of Columbia, there are caps on the rates of interest charged. In all other states, payday lending is disallowed. Many lenders get over this outlawing of cash advance payday loans by lending money from other states through banks that are chartered in states where short term loans are allowed. In some states caps are placed on the number of loans a borrower can borrow for short term purposes. Others impose a limit on the rate of interest charged on a short term loan. All states require lenders to have a license before they start lending money.
Federal laws apply to military cash advances. Senior officers in the armed forces are advocating disallowing short term cash advances to members of the armed forces. They believe that these loans cause hardship to lower rung officers and their families.

Cash advance payday loans are usually made to low income groups and lawmakers believe that they are exploited by lenders. These loans are given for financial emergencies at a high interest and lenders attempt to make a fortune out of a misfortune. The law attempts to protect the exploitation of low income borrowers.

ACCOUNTING PRICIPLES-SOME THOUGHTS

Introduction:
Accounting principles are the assumptions and rules of accounting the methods and procedures of accounting and the application of these rules, methods and procedures to the actual practice of accounting.
Definition of Accounting:
The American Institute of Certified Public Accountants defines accounting as “the art of recording, classifying and summarizing in a significant manner and in terms of money transactions and events, which are, in part at least, of financial character, and interpreting the results thereof”.
From the above, it is clear that, Financial Accounting basically deals with Financial Transaction. Its functions are described as follows:
Functions:
Recording – Journal entry
Classifying – Ledger accounts
Summarizing – Trail Balance, Profit and Loss account, Balance Sheet.
Interpreting – Financial performance by Profit and Loss account, Financial Position by Balance sheet.
CLASSIFICATIONOF ACCOUNTING PRINCIPLES:
Accounting Concepts:
Separate Legal Concept – here Business and Owners of the business are two separate entities. Example: The money invested by the proprietor of the business is treated as capital and shown as Liability. The business feels, one day or other it has to be returned back.
Going Concern Concept – Accounts are prepared on the basis that company will continue forever. Example: Credit sales are made, with the view that business will continue and collection can be made later.
Money Measurement Concept – here all Transactions must be expressed in terms of Money.
Cost Concept – Fixed Assets are shown at Purchase price as the base and Market value is not considered. Example: Land and Building may have increased; yet not considered. Exceptions to closing stock where valuation is done either at Cost price or Market price whichever is lower.
Dual Aspect Concern – For every Debit there is an equivalent Credit value. Example: Machinery purchased for Rs.2000.
Machinery a/c Dr. 2000
To Cash a/c 2000.
6.Accounting Period Concept – Though the company considered to be going concern, I order to measure the performance and also to ascertain its Financial Position the business transaction are related to particular segments called Accounting Period. The accounting period may be April to March or Jan to Dec.
7.Periodic Matching of Cost and Revenue – here an attempt is made to relate Revenue made with the Cost incurred. Example: Sales for accounting year is 500000, sales commission paid 20000. Assume the actual commission is to be paid is 50000. In order to match cost and revenue. Rs 30000 are cost relating to this accounting year, so the treatment goes as follows.
In Profit and Loss account In Balance Sheet Sales commission Rs.20000 outstanding commission Rs 30000
Add outstanding Rs. 10000
Realization Concepts – According to this concept revenue is recognized at the point at which the property in the goods (Ownership) transfers from seller to buyer. Example: customer “X” orders goods worth Rs.350000.Goods are manufactured and sent to “X”. Mr.”X” receives them on January 1(Ownership is transferred). Immediately sales revenue of 350000 is recorded.
Accounting Conventions:
Conservatism – Business accounts are prepared with a conservative view giving all provision for excepted loss and no provision for excepted gains. Example: Bad debts provisions are made, though actually they are not bad.
Full Disclosure – A true and fair disclosure (complete information) should be given while preparing the accounts of the business. In the annual reports of the company in order to make a complete disclosure, the practice of giving details information in the appendix is followed.
Consistency – Accounting practices should remain unchanged year after year. Example: if one method of Deprecation is adopted, while preparing the accounts of business continues to use the same method.
Materiality – The accountant gives more important to material information (significant) rather to immaterial details. Example: Expenses, which are least important to the business and for which very small amount leaves the business then, such expenses could be clubbed and showed in a single Sundry expenses account.

Understanding Inventory Cost Flow Assumptions

Current inventory levels affect the balance sheet of a company. The amount of product multiplied by the cost determines the amount of inventory reflected on the balance sheet. Inventory valuation is easy for companies selling small quantities of high value products because the number of items in inventory at any given time is small. Larger retailers like Wal-Mart and Costco have greater difficulty assigning inventory values and costs of goods sold because of the large number of products that flow in and out. To make this process easier there are multiple methods of assigning value to inventory. We will detail these methods through a fictional company, Candy Inc., to better understand how each affects inventory value and cost of goods sold at the end of the fiscal year.
Candy Inc. sells on average four million lollipops per year. They purchase their inventory every quarter based on the previous quarter’s sales. In 2008 Candy Inc. purchased 300,000 lollipops on January 1, 250,000 lollipops on April 1, 350,000 on July 1 to account for summer demand and 250,000 on October 1 to account for the remainder of the year. In 2008 the candy industry experienced its highest levels of inflation, rising costs, in 50 years. Each quarter saw a 25 cent increase because of the rising costs of sugar. As product flowed in and out of Candy Inc. it became impossible to assign actual value to the cost of goods sold and the current inventory. This example will help us understand the four inventory cost flow assumptions and how they affect current assets and net income.
The four inventory cost flow assumptions are specific identification, weighted average, FIFO (first-in, first-out) and LIFO (last-in, first-out). Specific identification is assigning value of the cost of goods sold and the current inventory based on the actual price paid. For Candy Inc. the cost of each lollipop from the manufacturer would be assigned to each lollipop. The problem Candy Inc would experience given the volume of candy sold is mixed up inventories which would make it virtually impossible to know the true cost of a single lollipop when it was sold to a consumer.
Another cost option is the weighted average cost flow assumption. Under this assumption the average price paid for the lollipops would be determined and assigned to remaining inventory and cost of goods sold. In our example, each quarter saw a 25 cent increase. In January lollipops cost 25 cents, in April they cost 50 cents, in July they cost 75 cents and in October they cost 1 dollar. In the weighted average model the total cost of inventory purchased for 2008 is $712,500.00 (300,000 X $0.25, 250,000 X $0.50, 350,000 X $0.75, 250,000 X $1.00). The average price paid per lollipop is $0.62 ($712,500 divided by 1,150,000). If Candy Inc. sold 1 million lollipops in 2008 150,000 lollipops remained at the end of the year. The remaining inventory would be valued at $92,934.78 (150,000 X $0.62) and the cost of goods sold throughout the year would be $619,565.20 (1,000,000 X $0.62). If Candy Inc. sold each lollipop at $1.25 the net income for 2008 would be $630,434.80 ($1,250,000 - $619,565.20).
The First-in, first out (FIFO) method is slightly more complicated than the weighted average. Despite the way inventory flows in and out of a company the value assigned to the cost of goods sold and current inventory would be based on first products in would be the cost assigned to first products out the door. In the Candy Inc. example, 1.15MM lollipops were purchase throughout the year at varying prices and 1MM were sold. The cost of goods sold for the year is $562,500 (300,000 X $0.25, 250,000 X $0.50, 350,000 X $0.75, 150,000 X $1.00). The remaining inventory is $150,000 (150,000 X $1.00). If Candy Inc. sold each lollipop at $1.25 the net income under the FIFO cost assumption would be $687,500.00 ($1,250,000 - $562,500).
Last-in, first out (LIFO) is the opposite of FIFO. The inventory values assigned to the cost of goods sold and the current inventory are based on the last items purchased are assigned to the cost of goods sold. The remaining inventory is then based on the cost of those products purchased earlier in the year. In the Candy Inc. example, 1.15MM lollipops were purchase throughout the year at varying prices and 1MM were sold. The cost of goods sold for the year is $675,000 (150,000 X $0.25, 250,000 X $0.50, 350,000 X $0.75, 250,000 X $1.00). The remaining inventory is $37,500 (150,000 X $0.25). If Candy Inc. sold each lollipop at $1.25 the net income under the LIFO cost assumption would be $575,000.00 ($1,250,000 - $675,000).
As you can see each of the different inventory cost flow assumptions greatly impacts the net income and current inventory values. In our example, Candy Inc’s net income was $630,434.80 under the weighted average method, $687,500.00 under FIFO and $575,000.0 under LIFO. The current inventory that makes up part of current assets was $92,934.78 under the weighted average method, $150,000 under FIFO and $37,500.0 under LIFO. Manipulation of current assets and net income would be easy if companies used different methods depending on the economic climate, therefore it is important to be consistent so users of financial accounting may accurately assess trends over time.

Financial And Tax Accounting

Financial and Tax Accounting

It is a common misnomer that and organization needs to use the same method of accounting depreciation for financial reporting and tax purposes. An organization must decide if it is cost effective to use more than one depreciation method and furthermore which method or combination of methods to use. Each method carries with it a distinct list of benefits and draw backs and can be customized to fit a company’s unique situation.
There are three main types of depreciation techniques.
Straight-Line - Simplest deprecation technique. A company estimates the salvage value of the item and the usable life. It then subtracts the scrap value from the original cost and divides by the life span in years to get the annual depreciation expense. The largest benefit of this method is that it is very simple to understand and easy to use. A major drawback to this technique is that it does not acquire all the possible tax benefit early in the life cycle, effectively leaving those tax dollars on the table longer.
Double-Declining Balance - This technique factors in the fact that an item is more useful near the time of purchase as opposed to near the end of its life. The organization records a larger expense of depreciation in the first few years and it continues to decline until the scrap value is reached. A major benefit to this method being largely front loaded; where most of the depreciation is taken at the beginning of the life cycle is in reducing the taxable income quickly. This method is more complicated and requires involvement of the technical staff to accurately estimate an items life expectancy.
MACRS - The method approved by the IRS. Similar to the Double-Declining balance method it allows for most of the depreciation expense to be absorbed near the beginning of an items life to maximize the tax benefit of the additional expense. This allows a company to retain more income early in the depreciation cycle while reducing their overall tax exposure. This carries the same benefits and drawbacks as the double declining balance method.
On the surface some organizations will identify the benefits of using one depreciation method for financial accounting and a different method for tax accounting. Mainly it allows the company to reduce their taxable income now while still maintaining an easy to read balance sheet. The costs associated with the extra staffing and complexity of tax law may make this type of approach cost ineffective for smaller organizations, but for larger corporations that have the purchase a large quantity of equipment on a yearly basis a dual method accounting system may be cost effective.
The smaller organizations that cannot carry the additional burden of increased staff necessary to keep up with ever changing tax law, the simpler approach of maintaining a single method of recording depreciation. In addition to saving on staffing costs, the tax benefit realized with a two method approach in a smaller organization is minimal at best. Like most other financial and tax reporting functions each company must find the method and situation that is both cost effective and maintainable.