Hoi Les or manker

[JPaul]

Is a debt considered to be an asset, in your black art.

[Gripper]

http://www.investopedia.com/university/ratios/debtasset.asp

[JPaul]

Does that mean "yes" sorry but I'm not big into the black arts.

[Gripper]

:idunno: Sorry I didn't understand it either,thought it might enlighten you a bit.

[JPaul]

:lol:

[100%]

If you owe Ben Afleck 2 gran it is not an asset.

[JPaul]

Cheers, that's cleared it up.

Stand down bankers.

[Barbarossa]

Is a debt considered to be an asset, in your black art.

Are you the one in debt, or is someone in debt to you? :idunno:

[JPaul]

Is a debt considered to be an asset, in your black art.

Are you the one in debt, or is someone in debt to you? :idunno:

Neither.

It's in relation to a thing.

[Biggles]

Debt does appear on the Balance Sheet but as a liability. It is part of the funding of the business but it cannot be shown as an asset otherwise it will muck up your gearing ratio (how much you have borrowed against assets).

Some companies tried to get really cute with debt a few years ago and put them under assets and amortised them. It made them look more liquid than they really were. They all went spectacularly tits up. I think they were largely responsible for the Cadbury Report. Coloroll the wallpaper crowd were culprits of this as I recall. Everything looked all right on the books but when interest rates peaked in the mid 90s they couldn't service the debts. A kind of mini Enron.

Not sure if that helps really :ermm:

[JPaul]

I'm taking that as a no.

[Biggles]

I'm taking that as a no.

Oops sorry

Yes that is a no. :) The loan cannot be treated as an asset.

The money borrowed obviously can used to buy an asset and that asset and will go in the top half of the Balance Sheet but the original loan must be shown as a liability.

[clocker]

You had me at "Oops".

[JPaul]

I'm taking that as a no.

Oops sorry

Yes that is a no. :) The loan cannot be treated as an asset.

The money borrowed obviously can used to buy an asset and that asset and will go in the top half of the Balance Sheet but the original loan must be shown as a liability.

Sorry, my bad, I'm not talking about a loan.

I'm talking about a debt as in, we've supplied you with goods and you are due to pay us, type debt. Would that be an asset.

Sorry if that's too technical.

[Biggles]

Oops sorry

Yes that is a no. :) The loan cannot be treated as an asset.

The money borrowed obviously can used to buy an asset and that asset and will go in the top half of the Balance Sheet but the original loan must be shown as a liability.

Sorry, my bad, I'm not talking about a loan.

I'm talking about a debt as in, we've supplied you with goods and you are due to pay us, type debt. Would that be an asset.

Sorry if that's too technical.

That is a current liability. Such debts are normally paid at invoice value within a reasonable time (can incur penalties if you go over a set period such as 60 days or perhaps gain a discount if you pay within an agreed time - say under 30 days)

Someone who owes you is an asset (assuming they will pay)
Stock is an asset (assuming you are not sitting on last year's fad)
Current cash is an asset
Trade debts are a liability

On the Balance Sheet you would have

Fixed Assets
Investments
(Perhaps some fancy stuff like Brand Names known as Intangible Assets)

Below that you would net off current assets and current liabilities

This would give you the top half of your Balance Sheet - Your Assets

So a trade debt is in that equation but it will reduce the value of your assets not increase it.


The bottom half of your Balance Sheet is how you funded the business - Equity, Long Term Debts, Retained Profits

The two should balance but as a rule in the exams they never did :ermm:

[JPaul]

No, my bad again. I don't think it's a liability. I supplied the goods to someone else and they owe me the money. (Obviously I didn't, it's to do with a thing).

Is the fact that they owe me payment an asset.

Sorry for continually wording the question poorly.

[clocker]

No, my bad again. I don't think it's a liability. I supplied the goods to someone else and they owe me the money.
You're a drug dealer, aren't you?
Is "kneecapping" considered a business expense then?

[Biggles]

No, my bad again. I don't think it's a liability. I supplied the goods to someone else and they owe me the money. (Obviously I didn't, it's to do with a thing).

Is the fact that they owe me payment an asset.

Sorry for continually wording the question poorly.

Ah!

Yes money owed in from a sale is an asset (working on the assumption that they are good for the money). This is shown under current assets as discussed above.

I think I have however ably demonstrated why this is possibly one of the most tedious subjects on the planet. :unsure:

You can if your inclination takes you that way work out your working capital cycle by calculating your creditor days debtors days and stock holding days to monitor your liquidity - how quickly you turn these things into real money. The quicker you pay your debts and the slower the stock turns over and the money owed you comes in = bad. The slower you pay and the quicker they pay = good. More businesses fail due to poor cash turnover than anything else.

[Biggles]

No, my bad again. I don't think it's a liability. I supplied the goods to someone else and they owe me the money.
You're a drug dealer, aren't you?
Is "kneecapping" considered a business expense then?

That is an operating expense (tax deductible if worded correctly)

[clocker]

Is "kneecapping" considered a business expense then?

That is an operating expense (tax deductible if worded correctly)
So, when you and your Wiccan thugs show up at my door I can have you beat up and claim it as an expense?

This accountant stuff is way cool.

[manker]

Feck. I'd have just answered; 'Yes, it goes in current assets under debtors'.

Les, I know that the rule is the more complicated one makes it sound, the more money one can charge ... but ffs, I think you went a bit over the top given that it's GCSE accounts and you're talking to a Scotchman on the interweb.

[JPaul]

Feck. I'd have just answered; 'Yes, it goes in current assets under debtors'.

Les, I know that the rule is the more complicated one makes it sound, the more money one can charge ... but ffs, I think you went a bit over the top given that it's GCSE accounts and you're talking to a Scotchman on the interweb.

:lol:

So it's a yes then.

Incidentally should I ask Les for the £250 back.

[Barbarossa]

It doesn't matter, because since he owes you it, it's already yours :blink:

[Biggles]

Barbie you are a natural - a career beckons.

[JPaul]

I may write it off as a bad debt, for tax porpoises.

Then send the bhoys round to collect it in cash.

Out of his arse.

[Biggles]

I may write it off as a bad debt, for tax porpoises.

Then send the bhoys round to collect it in cash.

Out of his arse.

Off book cash transactions make Gordon cry.

Bad JP! :nono:

[Gripper]

Just give us the nod JP an me and Bo will be on the Jawb

[Proper Bo]

Hoi, don't try and pimp me out, cunt.

[Gripper]

S'up you not up for a bit of paid violence.

[Proper Bo]

Oh right, I thought you meant bumsecks.

[Gripper]

Oh right, I thought you meant bumsecks.

:noes: Random violence FTW:w00t:

[JPaul]

I may write it off as a bad debt, for tax porpoises.

Then send the bhoys round to collect it in cash.

Out of his arse.

Off book cash transactions make Gordon cry.

Bad JP! :nono:

Are we saying that's a bad thing :blink:

[gatorade]

huh??/

[JPaul]

Off book cash transactions make Gordon cry.

Bad JP! :nono:

Are we saying that's a bad thing :blink:


I thought that was quite clear.

Bibliography - A recent Barbie post