The leasing and installment salesThe meaning and characteristics of installment buying and sellingInstallment buying and selling means selling goods that the seller deliver the goods or provide services to the buyer by the seller agreed to allow the buyer, payment for goods or services received by a number of installments. For the first time as a downpayment. This amount is called the cash down payment. After that, the buyer will be the remaining installments installments according to the agreed period of time, there may be interest for the money owed, or interest only.Accounting principles related to installment sales contracts.According to the profit of the business accounting principles occurs when there is a sale of the items, such as business credit products, it shows the item sales as revenue in the period was selling it without the need to wait to collect money from debtors before. But in the case of installment sales For a period of a long debt installment. Cause uncertainty in the debt collection costs related to the installment sales occurred in the period afterwards, so many need to distribute to the various rigid and therefore have accepted accounting principles that the installment sales revenue is still not considered as revenue until.How to collect money. Accounting principles by waiting to be treated as revenue from installment sales, until a bill of goods. Called accounting principles according to the criteria of the installment sales law is consistent with the excise tax. Compliance with accounting principles on the basis of installment sales supported by the corporate law, which as a result makes the venture can advance income tax payments until the item charge amount will be stored. But in some countries there is an idea about calculating the profits from the sale of installment payments, as well as our sales are considered as revenue gains in the sale period.How to carry on the installment sales contracts.How to carry on the installment sales agreement should specify the following important criteria.1. use the how to hire-purchase assets until the final installment payments.2. ownership in an asset or item will belong to the buyer. If the buyer will need to pay for the final, which is a conditional contract. 3. transferring to maintain benefits or funding company, until the final installment payments, and then transferring the goods to the buyer. But if it is not definite that the payment will be returned to the original vendor.How to save the accounts on the basis of installment sales.Accounting records in accordance with the criteria considered by the installment sales profit from the sale of installment sales caused by the sections of the Bill each year. The money store is the payback part, another part is the margin with regard to expenses incurred in selling, General and administrative expense is considered incurred each year how to record the difference between the sales price and cost of goods sold gross profit is not.Income and transfer income is considered as part of a periodic amount stored. Best expense deduction from revenues that are based on this criteria, is considered an expense arising out of any given installment sales, expense and deducted as income in the accounting period accounting method for an installment sale. At present, popular shows, sales, installment and installment cost of goods sold for each year, shown in the profit and loss statement for the year. By bringing the gains begin to receive money deducted from the gross profit for the year, plus the gross profit from the sale of installment of the year before the current year funds received. Included as income of the current year. Best gross profit from the sale of installment payments that have not yet received all the money appears on the balance sheet when the ending date, revenue from the sale of the cut-off for installment.Saving account on sale there are installment accounts in addition to the regular sales as follows:1. accounts receivable and sales cost of goods sold account to specify that the sales caused sales to leasing instalments separate from normal sales.2. account sales, gross profit, sales prices caused by installments less cost of goods sold gross profit, which is not treated as income. Everything is set for an appearance before the cut-off hand a liability risk, which will appear in the balance sheet at the end of period.3. installment sale margin accounts, or by leasing that have not received money from the sales price less cost of goods sold, which is the difference between debit dayot's gross margin is not treated as income because the Bill does not. When a receivable from koep will transfer the installment sales, gross profit, which is a credit to improvise on dayot.4. gross margin accounts, installment sales, resulting from a sale last year but the Bill in the current year, it is considered to be revenue of the current year are usually found in the calculation of profits from trading and leasing instalments are usually separate from normal trading in which the calculation of the profit from the sale, leasing and installment split into revenue and profit is not treated as income by accounting terminology used term and non-revenue recognition revenue is recognized. - Your profit as revenue (revenue recognition) Calculated from the amount collected from receivables during the year multiplied by the gross profit rate. - Earnings that are not regarded as income (not accrual) Calculated on the basis of receivables that the Bill does not. Multiplied by the gross profit rateTo calculate the gross profit rateGross profit margin (the current year.) = Gross profit margin (the year before.) =
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