The Costs Controlling Methods - Essay Example

The paper "The Costs Controlling Methods" is a good example of an essay on finance and accounting. Proper bookkeeping creates notable and remarkable differences in smooth operations with lots of sustainability when it comes to the administrative functions of a business organization. By getting informed of where the cash business money and funds are coming from as well as going to, an accountant can easily streamline his or her accounting activities. The costs controlling methods play significant roles in the maintenance of good reputation and getting rid of disputes arising on legal matters. The standard rule in accounting is that liabilities get recorded on the debit side of a cash book and at the same time invoiced as an expense (Hoggett). For the case of assets, the get debited on the cash book and invoiced as income. Liabilities are always regarded as costs since they involve cash flowage outward or from the business accounts or even the business’ cash at hand being given away. For the case of assets, they are considered as income since they involve money flowing into the company, which can be through sales and other interests gained on loans (Hoggett). In this case, there is a brokerage fee of $3,000 when a corporation (publicly listed) issued bonds. This particular brokerage fee is considered as an expense since it involves the flow of cash from the business to the individual broker who identifies a potential customer to buy the bonds from the company. Therefore, it means that the $3,000 is a liability that must be expensed on the invoice. The amount received from selling the bond or rather the price of the bond is invoiced as revenue to the firm (0-edu.knotia.ca.orca.douglascollege.ca). The net value of the bond is therefore gotten by finding the difference between the selling price of the bonds and the brokerage fee. The brokerage fee in the process of selling the bonds is considered as a transaction fee. This is mainly because the to get a client and persuade as well as convince him or her to buy them at the prevailing price set by the business organization some fee must be incurred. These particular fees are what get regarded as transaction costs in the matter. Therefore in the process of making an invoice, they are invoiced as expenses.