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
What does the current account of a partner in a partnership represent?
The capital available for withdrawal at the partner’s discreation
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.
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
What is a security on a debt?
something that the lender will take over the assets of the borrower in order to protect their interests.
When must a charge be registered?
within 21 days beginning with the day after the charge is created.
Where must a charge be registered?
With companies House
Who can register a charge?
Either the borrower or the lender
What are the implications of not registering a charge?
the charge is void against a liquidator, administrator or any creditor of the comapny;
and
the debt becomes immediately payable
Generally, if two people have a fixed charge over a fixed of floating asset, the earliest charge wins. Can the debtors re-arrange this?
Yes - The creditors can allow for a different ordering via a a Deed of Priority, an Intercreditor Agreement or a Subordination Agreement.
Where is the premium paid on shares shown in the balance sheet?
Share premium account
