Question

Discuss different steps in accounting for hire purchase

Answer 1

Hire purchase is an agreement between two parties in which 1party purchase an asset from 2nd party on instalment basis bcoz he has no sufficient money to pay for purchase......

And that instalment charges is called hire charge.....

Buyer has possession of the asset whereas seller has ownership of the asset

And when the buyer pays full amount of hire purchase he gets ownership of the asset

Hire purchase = cash price + interest on instalment

Down payment = Payment at beginning of the deal of hire purchase......



Hope this will help you......