Last Updated on August 27, 2024 by Maged kamel
Assets for Economy-part 3.
We continue in the discussion of Assets for economy-part 3.
Definition of supplies as assets for the Economy.
Supplies are defined as a) Materials not used directly in manufacturing your products (e.g., envelopes, packaging).
b) Materials used in the production of your products that are not able to be inventoried due to an inability to measure the material (e.g., thread) accurately
If you think your material is a supply, it should generally be entered as an expense rather than a material.
This is because supplies are typically claimable only within the year that they were purchased (materials used to produce your products, on the other hand, are treated as an “asset until sold”).
For your record keeping, you can optionally add a non-inventoriable material into the Crafty base and then create a material expense to record the purchase.
Definition of inventory as assets for the Economy.
Inventory is the term for the goods available for sale and raw materials used to produce goods available for sale.
Definition of inventory and examples.
The definition is quoted from the Investopedia site.
Inventory is one of a business’s most important assets because its turnover represents one of the primary sources of revenue generation and subsequent earnings for the company’s shareholders.
What is prepaid rent accounting?
The following definition is quoted from https://www.temenos.com/
A prepaid account is any of the following:
- Any account marketed or labeled as “prepaid” that is redeemable at multiple, unaffiliated merchants for goods or services, at ATMs, or for P2P transfers.
Any account issued on a prepaid basis in a specific amount – or not issued on a prepaid basis but capable of being loaded with funds after that – with the primary function of conducting transfers with multiple, unaffiliated merchants for goods and services at ATMs or for P2P transfers that is not a checking, share draft or NOW account
3. A payroll card account
4. A government benefit account
What is prepaid rent accounting?
The definition is quoted from Accounting Tools.
Prepaid rent is rent paid before the rental period to which it relates. Rent is commonly paid in advance, being due on the first day of the month covered by the rent payment.
The landlord typically sends an invoice several weeks early, so the tenant issues a check payment at the end of the preceding month to mail it to the landlord and have it arrive by the due date.
This presents a problem for the tenant since the payment would normally appear in its income statement as rent expense in the period in which the invoice was entered in the accounting software. However,, since the payment was recorded and the check was cut in the month before the period to which the payment relates, it is actually prepaid rent. Therefore, a tenant should record the amount of rent paid on its balance sheet that has not yet been used.
What is prepaid Insurance as an asset to the Economy?
Prepaid insurance refers to payments made by individuals and businesses to their insurers in advance for insurance services or coverage. Premiums are normally paid a full year in advance.
However, in some cases, they may cover more than 12 months. When they aren’t used up or expired, these payments appear on an insurance company’s balance sheet as a current asset.
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Engineering Economy. This link illustrates different types of economies and how to make economic decisions—the Time value of money, Applying Theory to Practice.
The next post contains the definition of depreciation and book value, depreciation, book value.