FINANCIAL ACCOUNTING SSS3 SECOND TERM              

WEEK 1

PURCHASE OF BUSINESS

Contents

• TERMINOLOGIES IN THE PURCHASE OF BUSINESS
• ACCOUNTING ENTRIES ILLUSTRATION

INTRODUCTION

Purchase of business is the activity of buying or acquiring a business as a going concern. This means acquiring an existing business with the intention of continuing its operations. this acquisition can be in any of the following ways

1. A sole trader acquiring the existing business of a sole trader
2. A partnership acquiring the business of another partnership or a sole trader
3. A company may be buying another or a partnership business.

In any of the acquisitions above, the assets and liabilities taken over by the purchasing businesses will be recorded in the same way.

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