Question

1. What GAAB tells on how to report an asset?

2. If a corporation uses a single class of stock, what must it be?

3. which accounts appear in after closing trial balance?

4. how to interpret and use credit terms?

Answer 1

1) Asset is a right of a company, with the expectation that it will yield future financial benefit. Theie are certain criteria on how to report on asset are-
1) Are controlled by the corporation
2)Are the result of a past transaction
3)Will result in a future benefit to the corporation.
GAAP requires assets to be valued using a specific method (which may be cost or fair market value). Additionally, accounting is traditionally conservative. As a result, items are often required to be expensed if certain criteria cannot be met that prove there will likely be a future benefit to the corporation.

The notes to the financial statements can be very helpful in understanding the values that have been given to an asset and why it might differ from your expected valuation.

2)if a corporation uses a single class of share it would be ordinary shares with equal voting rights.
   Ordinary shares- ordinary shares are shares in a company that are owned by people who have a right to vote at the company's meetings and to receive part of the company's profits after the holders of preference shares have been paid.

3) the post closing trial balance is a list of accounts or permanent accounts that still have balances after the closing entries have been made.
Accounts appear in after closing trial balance
1) inventory
2) cash
3) account receivable
4) account payable
5) prepaid rent
6)accrued expense
7) unearned income

4) credit term - this is the contract that describes the specific details of the seller’s payment requirements that the buyer must meet into order to purchase goods on account.
For example- standard term rate that applies across most industries is 2/10 N/30—often called 2/10 net/30.

This is the standard way to write out and abbreviate term details.

Percent discount if paid in cash / days to cash discount is available
Net amount of payment due / number of total days in credit period

These terms mean that a customer can receive a 2 percent discount on his purchase if he pays the entire balance in cash within 10 days. This is often referred to as the cash discount period. If the discount isn’t taken, the customer must pay the full invoice amount within 30 days of the purchase. This 30-day credit period is a sort of short-term financing for the customer. They can purchase goods without actually coming up with the cash immediately. They can then sell the goods to retail customers and pay for the goods within 30 days. This way the credit purchaser is never out of any cash.

Uses of credit term
1) there are numerous cases where wher buyer cannot make immediately payment to vendor for purchase of capital goods. So vendor sell buyer good on credit term.it help in increase sale and to earm profit.

2) as there is constant association between buyer and seller. The seller give buyer knowledge about the latest technology development or industry sight along with reminding for payment. Thus buyerwill get update about the latest technology development.

3) it help to increase the creditworthiness- suppliers in the entrepreneurial world do stay in touch with each other and by doing so, there comes a time when they share about the whereabouts of the businesses they supply goods to. This means that in case your supplier runs out of goods that you are demanding, they may go ahead and connect you with another supplier who has the goods that you want at that time.