An amount earned by a company on its interest bearing bank accounts or other investments. The amount should be reported as Interest Revenues, Interest Income, or Investment Revenues in the accounting period in which the...
An amount earned by a company on its interest bearing bank accounts or other investments. The amount should be reported as Interest Revenues, Interest Income, or Investment Revenues in the accounting period in which the...
A financial ratio that compares a company’s interest expense to the company’s income before interest expense and income taxes. It is an indicator of the likelihood that interest payments will be made in the...
What is the times interest earned ratio? Author: Harold Averkamp, CPA, MBA Definition of Times Interest Earned Ratio The times interest earned ratio is an indicator of a corporation’s ability to meet the interest...
What is interest income? Author: Harold Averkamp, CPA, MBA Definition of Interest Income Interest income is the amount of interest earned on investments (that promise to pay interest) and/or compensation for...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
Fees earned from providing services and the amounts of merchandise sold. Under the accrual basis of accounting, revenues are recorded at the time of delivering the service or the merchandise, even if cash is not received...
Under the accrual basis of accounting, the Interest Revenues account reports the interest earned by a company during the time period indicated in the heading of the income statement. Interest Revenues account includes...
transfers, check printing, etc. Bank interest earned Loan payments Electronic charges or remittances from suppliers and others Customer’s checks that were deposited but are now being returned because of insufficient...
(or Compounded) interest refers to earning interest on previously earned interest. 3. The amounts contained in a future value of 1 table for various combinations of n and i are referred to as future value __________...
. Multiple-step Right! Multiple-step shows operating revenues and expenses separate from the non-operating revenues and expenses. 9. Interest earned on investments would appear in which section of a retailer's...
, the company’s payroll entry will have the same accounts but different amounts due to the number of employees and/or the number of hours worked. Other examples of recurring entries with amounts that differ each...
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
Our Explanation of Break-even Point illustrates how to determine the number of units or sales dollars that will result in zero net income. The techniques rely on a product's contribution margin or contribution margin...
Income or revenue earned by a company that is outside of its main operating activities. For a retailer the interest earned on its temporary investments is a nonoperating revenue (or nonoperating income).
in the calculation.) The interest coverage ratio is also known as the times interest earned ratio. The interest coverage ratio is computed by dividing 1) a corporation’s annual income before interest and income tax...
statement. 6. Interest credited to bank account. Add To BOOK Balance Right! Add the interest to the Cash balance on the company's books. Deduct From BOOK Balance Wrong. Add To BANK Balance Wrong. The interest...
Our Explanation of Present Value of an Ordinary Annuity uses the appropriate present value factors for discounting a stream of equal cash amounts occurring at equal time intervals. An important feature is the use of loan...
with the higher operating expenses such as gasoline. The delivery surcharges should not be reported as nonoperating revenues or other income. Nonoperating revenues or other income items would be outside the main...
What is the effective interest rate? Author: Harold Averkamp, CPA, MBA Definition of Effective Interest Rate The effective interest rate is the true rate of interest earned. It can also mean the market interest rate, the...
, effective interest rate earned on a project after taking into consideration the time value of money and the periods when the various cash amounts flow in and out. If you use present value tables to calculate the...
Our Explanation of Adjusting Entries gives you a process and an understanding of how to make the adjusting entries in order to have an accurate balance sheet and income statement. Eight examples including T-accounts for...
Our Explanation of Future Value of a Single Amount will show you the power of compounded interest on a single deposit. You will see how the future value tables can be useful as well as the rule of 72.
Our Explanation of Accounting Principles provides you with clear and concise descriptions of the basic underlying guidelines of accounting. You will see how the accounting principles affect the balance sheet and income...
Our Explanation of Present Value of an Ordinary Annuity uses the appropriate present value factors for discounting a stream of equal cash amounts occurring at equal time intervals. An important feature is the use of loan...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
turnover ratio Times interest earned ratio To assist you in computing and understanding accounting ratios, we developed 24 forms that are available as part of AccountingCoach PRO. You can also read our Explanation of...
Our Explanation of Debits and Credits describes the reasons why various accounts are debited and/or credited. For the examples we provide the logic, use T-accounts for a clearer understanding, and the appropriate general...
Our Explanation of Future Value of a Single Amount will show you the power of compounded interest on a single deposit. You will see how the future value tables can be useful as well as the rule of 72.
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
in a Bank Reconciliation A few examples of a bank credit memo appearing in a company’s bank account include: The bank adding interest that was earned for having money on deposit The bank having collected a note for...
(not sufficient funds) Bank fees for returned checks Corrections made by the bank for the company’s errors in its deposits Collections made by the bank of the company’s notes receivable Interest earned on bank...
can purchase a $300,000 7% bond that matures 5 years later for $287,832. The investor will receive the following cash flows: semiannual interest of $10,500 at the end of each of the 10 six-month periods + $300,000 at...
earned for the company? 6.7 Wrong. See the calculations for 10.0. 9.0 Wrong. See the calculations for 10.0. 10.0 Right! The times interest earned is calculated by taking the earnings of the company before interest and...
Our Explanation of Present Value of a Single Amount discusses the time value of money and the need to discount future amounts to the time of an investment or other transaction. The present value of 1 table is used to...
Interest on interest. For example, if $1,000 is deposited in an account earning interest of 6% per year the account will earn $60 in the first year. In year two the account balance will earn $63.60 (not $60.00) because...
Where does accrued interest on notes receivable get reported on the balance sheet? Author: Harold Averkamp, CPA, MBA Definition of Accrued Interest on Notes Receivable Accrued interest on notes receivable is the amount...
Our Explanation of Income Statement helps you learn the most important features of a corporation's income statement (also known as the statement of operations or profit and loss statement). We provide more understanding...
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