Accounting Issues Related to Advances Granted

Abstract

Commercial transactions play a particularly important role in the activity of economic units. These operations generate income and expenditure, affect amounts owed to suppliers and amounts receivable from customers and always involve a link between two economic operators, one called the supplier, for whom the operation represents a sale, and the other called the customer, for whom the same operation represents a purchase. Payables and receivables arising from the enterprise's relations with natural and legal persons outside the enterprise as well as with natural persons inside the enterprise are reflected mainly through class 4 "Accounts receivable from third parties". The concept of debt refers to an undertaking by a specific person to pay a sum of money, deliver a good, execute a work or render a service. A natural or legal person who owes a debt is generally called a debtor. A debt is the right of a person to claim from a third party the payment of money, the delivery of a good, the performance of a service or the execution of a work. The holder of a claim is generically referred to as the creditor. Receivables and payables are valued at the time they are entered in the balance sheet, when they are entered in the inventory, at the year-end and when they are settled (when they are written off). In order to break down the information on debts on purchases according to the structure of debts and receivables, the following accounts have been entered in group 40 ʺTrade accounts payable and similar accountsthe accountsʺ 401 ʺSuppliersʺ, 403 ʺAccounts payableʺ, 404 ʺSuppliers of immovable propertyʺ, 405 ʺAccounts payable for fixed assetsʺ, 408 ʺSuppliers - invoices not yet invoicedʺ and 409 ʺSuppliers – debtorsʺ have been introduced. The last account is a receivables account with an asset accounting function, while all other accounts have a liability accounting function. In addition to liabilities, enterprises may also record receivables from their suppliers. These are generated by two categories of transactions: advances to suppliers and the receipt from the supplier of packaging circulating on the refund system.