Internal financing refers to net income plus depreciation less dividends. Internal finance comes from internally generated cashflows. External financing refers to the other sources of funds which are available to the firm from outsiders that is debtors, shareholders and bond holders.
Charles W answered the question on December 27, 2017 at 13:50
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Date posted: December 27, 2017. Answers (1)
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Date posted: December 27, 2017. Answers (1)
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a) Write brief notes on
i) Hire purchase
ii) Credit sale
iii) Effects of goods repossessed on hire purchase transactions
b) Fiona Limited bought Motor Vehicle on hire purchase terms. The transactions involved
the following:
i) The cash price Sh.800,000
ii) Hire purchase interest 25%
iii) Deposit 20% of cash price
iv) 5 annual equal installments.
The purchase was effected on 1st January 2015.All payments were made. Depreciation is at a rate of 10% per annum on straight line.
Required:
Asset account (3marks)
Hire purchase company account (4 marks)
Hire purchase interest account (3marks)
C In relation to investment accounting , distinguish the following terms
i) Cum – dividend and Ex – dividend (2 Marks)
ii) Bonus issue and Rights issue (2Marks)
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Required:
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Date posted: November 24, 2017. Answers (1)
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