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1.When production cost of goods are become higher.
2.Hike in interests on secured & unsecured loans, debentures and dividend on share capital.
3.when debtors balances are unable to collect in time and those balances turned out as sundry bad debts.
4.when payments were not made in credit period.
5.Increase in staff, facilities (Administration, Operations & Manufacturing).
6.Increase of Dollar price in international market comparative domestic currency value (In the case of purchases made from foreign and has to pay in dollars).
7.If the Net profits of orgn. not reached up to expectations.
8.Inflation (required hike in salaries & other benefits).
9.Decrease in the assets value (Current & Fixed).
10.Increase in the raw-material prices & other transportation expenses.
11.Competitive market- some times we have to sell our products less than the production cost, due to competition.
12.and many more.................
What else can I help you with?
In which types of accounts are increases recorded by credits?
Liabilities, Sales revenue, Capital.
Does purchasing supplies on account increases liabilities?
Yes, purchasing supplies on account increases liabilities. When a business buys supplies on credit, it creates an obligation to pay the supplier in the future, which is recorded as accounts payable. This transaction increases both the supplies (an asset) and accounts payable (a liability) on the balance sheet.
How does rendering of services for cash affect the accounting equation?
cash assets increase Equity increases as sales revenue increases and net income increases. No effect on Liabilities and Expenses
Is decrease in liabilities is credit?
No, liabilities have a normal credit balance, that means that increases are also credit, and that decreases are debit. Please refer to the link provided for debit and credit rules.
Can you explain how transactions are debited or credited in accounting?
In accounting, transactions are debited or credited based on the accounting equation, which states that assets must equal liabilities plus equity. When a transaction increases assets or expenses, it is debited. When a transaction increases liabilities, equity, or revenue, it is credited.
What causes stockholder equity to change?
Remember that in accounting, the Mother of All Equations is: Assets - Liabilities = Stockholders' Equity Anything that increases or decreases your assets or liabilities is going to cause your Stockholders' Equity to change as well.
What will a decrease a revenue and a increase liability?
I can think of nothing that will do that in one transaction. Revenue generally does not effect your liabilities. Revenue is an Owners Equity account and most transactions in revenue effect that, not liabilities. (there is one exception and it is explained later on.)Expenses decrease revenue, which in turn decreases retained earnings which effects owners equity.Dividends Paid decrease retained earnings, which in turns also effects owners equity.The only time any "revenue" has an effect on liabilities is if it is an "unearned" revenue. An unearned revenue is a liability, however, it "increases" your liabilities and increases your assets at the same time. Once the unearned revenue is "earned" it then increases your "revenue" and you decrease your liability.
Is debit positive or negative?
In case of Assets debit is positive which means increase in assets as well as for liabilities debit means reduction in liabilities but for expenses it is negative as it increases the expenses and reduces the profit
How are liabilities affected by debits and credits in accounting?
In accounting, liabilities are affected by debits and credits based on the type of transaction. When a liability increases, it is recorded as a credit, and when a liability decreases, it is recorded as a debit. This helps maintain the balance in the accounting equation.
If current liabilities are 7714 and total liabilities are 18187 what is the ratio of current liabilities to total liabilities?
Current Liabilities to Total Liabilities Ratio = Current Liabilities / Total Liabilities Current Liabilities to Total Liabilities Ratio = 7714 / 18187 Current Liabilities to Total Liabilities Ratio = 0.42 or 42%
Why are liabilities a credit?
Liabilities are considered credits because they represent obligations that a company owes to external parties, such as creditors and suppliers. In double-entry accounting, each liability increases with a credit entry, reflecting the fact that the company is taking on a responsibility to pay back the borrowed funds or settle debts. This credit nature of liabilities helps maintain the accounting equation, where assets equal liabilities plus equity. Thus, liabilities indicate a source of financing that funds a company's operations or growth.
What are the classification in the liabilities?
liabilities can be classified as short term liabilities and long term liabilities
