2.8 Accounting concepts 2- Depreciation

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Из курса от партнера University of London

International Business Capstone

48 оценки

University of London

International Business Capstone

48 оценки

Курс 6 из 6 — Specialization International Business Essentials

The Capstone project is the culmination of the International Business Essentials specialisation, and brings together knowledge gained in the previous courses and applies this to a real-world scenario. Throughout the Capstone, you’ll be taught new skills, and will use the knowledge you have gained throughout the Specialisation to develop a business plan. This course forms part of a specialisation from the University of London designed to help you develop and build the essential business, academic, and cultural skills necessary to succeed in international business, or in further study. If completed successfully, your certificate from this specialisation can also be used as part of the application process for the University of London Global MBA programme, particularly for early career applicants. If you would like more information about the Global MBA, please visit https://mba.london.ac.uk/. This course is endorsed by CMI

Из урока

Development of the Financial Statements for Business Planning

This week will include concepts such as the income statement, the balance sheet, and the cash flow statement.

2.1 Pricing part one10:25

2.2 Pricing part two9:08

2.3 Sales forecast 15:19

2.4 Cash forecast 15:12

2.5 Forecast examples 1 (Ian Speedy)12:29

2.6 The business cycle6:17

2.7 Accounting Concepts 14:26

2.8 Accounting concepts 2- Depreciation3:10

2.9 Example- Genius Ltd5:56

2.10 Example Genius Ltd Cash flow3:19

2.11 Income Statement3:14

2.12 Income Statement Solution5:02

2.13 Balance Sheet6:06

2.14 Balance Sheet Solution5:08

Познакомьтесь с преподавателями

Barry McCarthy
Senior Teaching Fellow
School of Management, UCL

[MUSIC]

Okay, having looked at these accounting concepts and

in particular the matching concept.

This matching principle where we're matching income and

expenditures of the relevant period, despite it having been paid or not.

There's one other really important concept that I need to tell you about and

that's the concept of depreciation.

Now, when you buy an asset, a non current asset, a long term asset,

such as a motor vehicle or a large piece of equipment, or a computer,

even a building, a piece of land, it's not really fair.

That year one should bear the total cost

of that particular asset which could be millions of pounds.

So, what accountants do is they spread the cost of that asset

over what we call his useful life, and that's called depreciation.

Let's be clear before move into depreciation,

I'm not talking about spreading the cash.

The cash payment is made when you buy the asset.

What I'm talking about Is profit and how if each year is going to be utilizing and

using that particular asset, then it's only fair that each year

should get its fair share of the cost of the asset.

That's one rationale behind depreciation.

The other rationale behind deprecation is that these assets lose value over time.

So your depreciation is there to attempt,

to reflect the value of the asset as it ages.

In other words, it's reduction in value for wear and tear etc.

So depreciation has a two-fold effect in accounting.

Is to make sure that year gets it's fair fair.

In other words, the spreading of the cost and

to try to reflect the value of the asset as it ages through wear and tear.

A simple example of depreciation.

If you bought a motor vehicle for 10,000 pounds and

you expected it to last for five years.

Then simply dividing the cost of 10,000 by the life of 5

years means that your depreciation charge would be 2,000 pounds each year.

What does that mean?

It means that the expense of depreciation will be charged to

the income statement, 2,000 pounds, for the next five years.

Of course, don't forget, the 10,000 pounds cash would have

gone out of your business on the day that you actually purchased that motor vehicle.

And I just reinforced that fact that now maybe you're starting to

realize that cash is not the same as profit.

So depreciation, an important concept to understand,

and that will figure in our question that I'll go through shortly.

[MUSIC]

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