Theme of the lecture №3. Fixed assets
The economic substance of the underlying assets (capital), their composition and structure
Accounting and valuation of fixed assets
Form of reproduction and improvement of fixed assets
Indicators of fixed capital
1.Fixed assets, also known as a non-current asset or as property, plant, and equipment (PP&E), is a term used in accounting for assets and property which cannot easily be converted into cash. This can be compared with current assets such as cash or bank accounts, which are described as liquid assets. In most cases, only tangible assets are referred to as fixed.
2.Capital assets are capital assets in monetary terms. Fixed assets are reflected in the account at their historical cost, ie the sum of the cost of their manufacture or acquisition, transportation, installation and other costs associated with entry into force.
3.With the physical wear of a loss of fixed assets of their use value, that is, the deterioration of technical, economic and social characteristics under the influence of the labor process, the forces of nature but also because of non-use of assets. A significant proportion of obsolete fixed assets in production, such as industry, causing significant losses in the economy, because of - first, the aging equipment requires a bigger investment in major repairs to keep it in working condition; in - the second, outdated production is not opportunity to use new technology - at least in full. Consequently, the volume of goods and services decreases. Specification backward and outdated, and therefore unprofitable production creates a zone of stagnation, prevents scientific - technical progress. Obsolescence usually occurs before physical deterioration, that is, fixed assets, which can still be used, is not cost effective, and is of two kinds (forms).
4. In these technical level and structure of fixed assets increased output, lower costs and increase savings businesses depend on the extent of their use. All indicators of basic production assets can be grouped into three groups:
1. indicators of extensive use of fixed assets, reflecting the level of use of their time;
2. indicators of the intensive use of fixed assets, reflecting the level of their use of power (productivity);
3. indicators of the integral use of fixed assets, taking into account the cumulative effect of all factors - both extensive and intensive.
Basic literature: 1,2,3,4,5,6,7,8,9.
Additional literature: 10,11,12,13,14,15,16.
Periodicals: 17-60
Internet sources and the optional list of electronic sources: 1-6
Theme of the lecture №4. Working capital
1. The concept and composition of revolving funds (capital) of the enterprise
2. The evaluation and valuation the use of working capital in production
3. Turnover of capital and its indicators
1.Current capital is often referred to as working capital. Essentially, current capital is the liquid financial assets that a company has on hand to manage the day to day operations of the company. Current capital is understood to be free of any other obligation, and is readily accessible at all times.
One important aspect in determining the amount of current capital is to allow for the necessity of covering any liabilities that are outstanding at the present time.
Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Working capital is a financial figure that represents the liquidity of a business based on available current assets and current liabilities. Assessing the status of current capital is important to any business. The presence of current capital at any given time is a strong indicator of the overall financial strength of the company, as it demonstrates the ability of the corporation to fulfil short-term obligations to various creditors, as well as compensate employees for their labours. Companies with little or no current capital are in need of re-evaluating the operational process and making changes that will help keep the operation profitable over the long term.
2.Current assets and current liabilities include three accounts which are of special importance. These accounts represent the areas of the business where managers have the most direct impact:
accounts receivable (current asset)
inventory (current assets), and
accounts payable (current liability)
Accounts receivable (current asset) - Money which is owed to a company by a customer for products and services provided on credit. This is often treated as a current asset on a balance sheet. A specific sale is generally only treated as an account receivable after the customer is sent an invoice.
In a business accounting context, the word inventory is commonly used in American English to describe the goods and materials that a business holds for the ultimate purpose of resale. In the rest of the English speaking world stock is more commonly used, although the word inventory is recognised as a synonym. In British English, an the word inventory is more commonly thought of as a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished. In American English, the word stock is commonly used to describe the capital invested in a business, while in British English, the word share is more widely used in the same context.
3.Turnover Funds consist of three parts:
- Industrial supplies;
- Work in progress and semi finished products of own manufacture;
- Expenses of future periods. Production Inventory.
Unfinished production and semi-finished products of own production of it that has not yet passed all processing. Deferred expenses is elements of current assets, which include the cost of training and development of new products, taking place in this period but will be repaid in the future. Turnover of business assets in their movement are also associated with the funds circulation serving the sphere of circulation. They include the end products, finished products, which is shipped and in transit, cash in current and other accounts, cash in pending settlements, including accounts receivable and cash on hand. Funds circulation - is the residue of finished products in stock companies shipped but not paid for the goods and the balances of enterprises on the current account at a bank office, in the calculation of receivables and enclosed in a short-term securities. Some practical importance are identification and evaluation of the structure of current assets. They (the funds) are used more efficiently when their greater part is occupied in the production. Stay current assets in circulation - only a necessary condition for the continuity of the process of reproduction, but this part of the enterprise funds is not directly involved in establishing the value of manufactured products. Turnover ratio is defined as the ratio of current annual turnover of their annual average number of revolutions and indicates who made the working capital for the period.
Basic literature: 1,2,3,4,5,6,7,8,9.
Additional literature: 10,11,12,13,14,15,16.
Periodicals: 17-60
Internet sources and the optional list of electronic sources: 1-6