POA lesson with Question and answer

 Trade receivables are customers who bought goods on credit from the firm.   So when goods are sold on credit, we will need to create a Trade receviable account. The double entry will be Dr Trade receivable and Cr Sales revenue When the credit customer made payment by cheque, the double entry will be Dr Cash at bank and Cr Trade receivable This will be the ideal situation. However, sometimes credit customers may not be able to make payment due to non accounting factors like economic downtown or even case like COVID 19 which may impact on their business tremendiously. When trade receivable facing difficulty in payment, there are always sign to show that, 1. cheque dishonoured 2 no response to call or text or email 3 debt long overdue. So those debts that cannot be collected will need to be written off as impairment loss on Trade receviable. We should recognised it as uncollectibe and most business will first make provision for this loss ie Allowance for impairment on Trade receivable. T

In this section, I will show you how to calculate depreciation using and incorporated this into the financial statement. As we learnt that Non current Assets are for use in the business and not for the purpose of resales, but over time, the assets will depreciate due to few factors like:- 1 wear and tear 2 usage 3obselences. I will introduce two methods of depreciation, -- reducing balance method and straight line method. Straight line method The non current assets will have equal amount of depreciation over its expected useful life Depreciation = Original cost price - Scraped value                                  Estimated useful life or  Depreciation =Rate of depreciation x [Original  cost of the Non Current Asset - scraped value] Example 1 Cost of furniture = $10000 Scraped value = $1000 Estimated useful life= 5 years Calculate the depreciation for 1st and 2nd year. Depreciation = 10000-1000                                5                       =$1800 Depreciation for 1st and 2nd