Classification of Non-Cash Transactions Homework Answers
Â A financial venture that has no affect on cash flow instead is related to the ownerâ€™s liabilities, and assets are called a non-cash transaction. When a non-cash transaction is recorded in a statement of cash flow, then these entries are merely on accounting terms which do not include actual cash movement.
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Non-cash or cashless revenues
There are times when a firm earns revenue by selling or shipping products in specific accounting time period, but the consumer may not pay the amount instantly, instead, the payment may come down in the next operating cycle, so till the amount is received, this mentioned revenue is a non-cash revenue. This type of revenue remains a cashless one till â€“
- The cash payment is made by the customer.
- The seller takes a decision that he will not receive the payment, so the revenue, in that case, is considered to be bad debt.
Students can learn more about such revenues by searching online links classification of non-cash transactions homework answers.
Non-cash or cashless expenses
When owners use up their assets instead of cash that decreases their equity, then such an expense is called cashless expense. In this form, there is no flow of cash. Non-cash expenses are noted in the income statement and help in reducing the tax deduction of the firm for that operating cycle.
Examples of non-cash entries
The two common examples of non-cash transactions are amortization and depreciation. These entries are used to record a firmâ€™s expenses within a specific period.
A company often purchases fixed assets like machinery, furniture, etc. for operational requirement of the business. This asset loses its value over the years. This reduction in the worth of the asset with time due to continuous use is termed as depreciation.
The procedure in allocation of price of intangible assets through a time period is termed as amortization. The repayment of the loan principle over a specific time period is called amortization. Students can search for topics like classification of non-cash transactions homework answers online to get more information on depreciation and amortization.
Features of non-cash transactionsÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
- Fixed assets are non-cash
- These do not refer to liquid objects.
- These cannot be converted into any other form of asset.
- Fixed assets are large in size, cannot be moved in addition they have a long life.
- Fixed assets have depreciation values with affect on taxes.
Types of non-cash transactions
Non-cash transactions are practiced in all sectors. Few different types of such non-cash transactions are as follows â€“
- Exchange for labor
There are labor payment options which are cashless. The labors are assigned work, and in return for completion of that work, they are provided with food and clothing. In this format, there is no exchange of cash.
- Exchange for non-labour
This is also a format of giving non-cash payment to labor. Example could be when a farmer is paid with feed for his cattle that he uses for mowing the field.
- Non-cash payment in form of gift
At times, one could bring food for animals being raised for agricultural purposes as a gift. This again does not involve exchange of cash. Students can learn more about types of cashless transactions by searching for topics like classification of non-cash transactions homework answers online.
Advantages of non-cash transactions
- The biggest advantage of non-cash transactions is the convenience it offers. Individuals do not need to carry huge amounts of cash, this, in turn, lowers the risks of theft and the inconvenience of having cash in hand. Moreover, non-cash purchase does not involve requirement of odd denominations of cash.
- Many countries give discount on service tax when products are purchased There could be discounts on purchase of bus or railway tickets. This helps consumers to save on their expenses.
- When purchases are made using card instead of cash, these are in record of the consumers. Bank statements can remind them of their expenses and in turn, help them to plan their purchases.
- Tracking black money also becomes easy when payments are made without using cash. Purchase of products with cash makes it really difficult to track illegal use of money. Cashless purchases have all the records in bank statements which can be tracked
- If cash is stolen, then it is almost impossible to be retrieved, but in case card is stolen, it can simply be blocked, and any misuse of that card can be stopped. Especially when people are traveling, card could be a much safer option to carry money instead of liquid cash.
- When purchases are made via card, it involves transactions that are recorded through banks, this, in turn, helps government to increase the tax generated from consumers.
Thus, to sum up, non-cash transactions are prevalent in financial accounting and are advantageous to a company in many ways. A tax deduction is one of the biggest benefits of non-cash transactions.
In most cases students face a major issue in regards to understanding core concepts of this subject. Hence, you need to get to the core of that subject and these manuals are a great support to those students, not only explaining concepts in detail but ensuring that in case of assignments and projects, you can seek their services.
So, non-cash transactions are an important aspect and learners should have a clear concept about the topic. Students can have a deeper idea about non-cash transactions by searching topics like the classification of non-cash transactions homework answers online.