10 - BL - Debt Flashcards
When are long term liabilities due to be repaid?
In one year or more
What is a bad debt?
A debt is a ‘bad debt’ when a business knows with certainty that it is never going to receive it.
What is a doubtful debt?
A doubtful debt occurs when a business is providing for the possibility that a debt or debts may not be paid
How are doubtful debt provisions treated in the balance sheet?
Its nature, and effect on the Balance Sheet, is most similar to that of a liability account and it is treated as such, because the amount of assets available to the business is reduced by the amount of the provision
What does the capital account of a partner in a partnership represent?
The original capital introduced by them
What does the current account of a partner in a partnership represent?
The capital available for withdrawal at the partner’s discreation
When must a private company file accounts at company’s house?
9 months after the APE
When must a public company file accounts at company’s house?
6 months after the APE
Where is tax shown in a company’s accounts?
The Profit and Loss Account of a company includes a statement of the tax the company should pay on its profits.
Where are dividends shown?
Statement of Changes in Equity (SoCiE). This shows profits brought forward and added to current year profits subject to any deductions for dividends
Can private companies issue bonds to the general public?
No - only targeted investors
What is a debenture?
Any form of debt security issued by a company
AND
A document which creates security. The loan agreement sets out the terms of the loan, and the debenture sets out the details of the security.
What does a fixed charge mean for the borrower
creditor can control what the security provider can do with the fixed charge assets. Borrower can still use the asset generally but cannot dispose or charge it.
What does a floating charge mean for the borrower
whatever assets in that class are subject to floating charge. Security provider can dispose of the assets until crystallization (fixes the assets in relevant class and creditor acquires control)
What is a debt security?
a type of debt - e.g. a bond