advance payment to supplier
- Thread starter ustina
- Start date
If someone pays money to you that is a liability because you must pay that money back. If you pay an advance to some one else that is an asset beacause they must pay you back.
Or to look at it another way. You had an asset of £10,000 in your bank account. You now have an asset of £10,000 that must be repaid to you.
And if you put it in as a current liability your balance sheet won't balance.
Or to look at it another way. You had an asset of £10,000 in your bank account. You now have an asset of £10,000 that must be repaid to you.
And if you put it in as a current liability your balance sheet won't balance.
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Why would a payment to one supplier reduce your liability to another?
How your balance sheet might look before making the payment
Assets ..................£5,000
Bank...................£11,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
After paying the money in advance
Assets ..................£5,000
Paid in advance....£10,000
Bank.....................£1,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
After you receive the goods
Assets ..................£5,000
Stock..................£10,000
Bank.....................£1,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
How your balance sheet might look before making the payment
Assets ..................£5,000
Bank...................£11,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
After paying the money in advance
Assets ..................£5,000
Paid in advance....£10,000
Bank.....................£1,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
After you receive the goods
Assets ..................£5,000
Stock..................£10,000
Bank.....................£1,000
Total assets.........£16,000
Liability to Supplier A...£16,000
Total liabilities.............£16,000
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- Original Poster
- #7
thank you very much ....OMG... so all my accounts wrong..because sameone give me wrong advice...
my Balance sheet look like this
Current assets..
cash and bank .......2196
Liability to supplier A (16,000)
capital advance to Supplier B 10,000
short loan to Director ( 27,327)
total failing within one year ( 33,327)
Total Nett assets ( 31131)
Capital and reserve 1
Retained loss ( 31132)
its my first year of trading...completely lost...
my Balance sheet look like this
Current assets..
cash and bank .......2196
Liability to supplier A (16,000)
capital advance to Supplier B 10,000
short loan to Director ( 27,327)
total failing within one year ( 33,327)
Total Nett assets ( 31131)
Capital and reserve 1
Retained loss ( 31132)
its my first year of trading...completely lost...
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0
If you think the accounts do not meet the Companies Act you can file amended accounts.
http://www.companieshouse.gov.uk/infoAndGuide/faq/amendingAccounts.shtml
http://www.companieshouse.gov.uk/infoAndGuide/faq/amendingAccounts.shtml
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