Categories and Accounting of Financial Reserves at a Trade Enterprise

Abstract

In spite of longer than 20 years of reforms in the accounting and reporting system in Ukraine, weak attention has been paid to issues related with the methodology of accounting of financial reserves, including at trade enterprises. The purpose of the study is to outline important problems in the accounting of financial reserves in the trade sector and formulate recommendations on improvements in the respective methods.

A review of current regulatory acts in Ukraine, stipulating the methods for accumulating and use of financial reserves, is made; a critical analysis of these methods is given. Recom­mendations on improvements in the accounting of selected categories of the existing financial reserves in the context of trade enterprises are proposed, such as the reserve for bad debts, the reserve for future expenditures and payments etc. In view of the peculiarities of trade business, trade enterprises should care to create the reserve for natural losses and the reserve for current repair of fixed assets, with the detailed accounting by each category of assets.