Financial Accounting

May 26th, 2016
Studypool Tutor
The University of Texas at Tyler
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This are full notes with practice questions focusing on Branch Accounting, Hire purchase, Published Accounts, Insurance, Income and comprehensive income statements. Its very helpful for second years and freshmen.

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Showing Page: 1/117
HIRE PURCHASE AND INSTALMENT ACCOUNTSIntroductionHire purchase is a way of buying non-current assets where the buyer is not required to pay full amount atthe time of purchase. Thus the buyer pays a down payment (deposit) and the remainder is paid ininstallments.In the agreement for hire purchase the following must be stated:-The hire purchase price and the cash price.-The amount of installment and the date of payment.-A description of the goods sufficient to identify them.Differences between hire purchase and the normal purchaseHire purchase-Ownership remains with the sellertill last installment is made-The buyer pays in installments overNormal purchase- The ownership is transferred to buyerimmediately- The payments may be lump sum at once.a period of say years/months-The cost is higher to include- The cost is lower since hire purchase hire purchaseinterest.interest is not includedNB: If the buyer does not pay all the installments the asset would be repossessed by the seller. In thiscase there is no refund of the amount already paid.Credit saleIn credit sale agreement, the title of goods passes to the buyer immediately on delivery and the purchaseprice is payable in installments. In the event of default in payment, the seller can only sue for unpaidinstallments. Thus he cannot repossess the goods. This is normally for less durable goods like clothes.ACCOUNTING OF HIRE PURCHASE TRANSACTIONSAccounting treats assets bought on h

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