: $60,000 Year 3: $80,000 Year 4: $100,000 Year 5: $70,000 The payback period is 3.4 years ($20,000 + $60,000 + $80,000 = $160,000 in the first three years + $40,000 of the $100,000 occurring in Year 4). Note that the...
: $60,000 Year 3: $80,000 Year 4: $100,000 Year 5: $70,000 The payback period is 3.4 years ($20,000 + $60,000 + $80,000 = $160,000 in the first three years + $40,000 of the $100,000 occurring in Year 4). Note that the...
Our Explanation of Financial Statements provides you with the highlights of each of the five external financial statements issued by U.S. corporations. Our insights will give you a good understanding of what the...
The rate that will discount all cash flows to a net present value of zero.
Factors that are used to convert future cash flows to their present value.
In accounting this is the rate used to discount future cash flows in order to determine their present value.
A term used in evaluating business investments. It represents the targeted rate that a company needs to earn. It is also referred to as the discount rate, because this rate is used to discount the future cash flows to...
A term used to describe the net present value method and the internal rate of return. The model discounts future cash flows back to the present time.
See income statement. To learn more, see Explanation of Income Statement.
See income statement. To learn more, see Explanation of Income Statement.
A statement that shows the changes in retained earnings from one point to another.
One of the financial statements issued by a nonprofit organization which reports expenses according to both function and nature. Learn more about Nonprofit Accounting.
The statement of comprehensive income covers the same period of time as the income statement, and consists of two major sections: Net income (taken from the income statement) Other comprehensive income (adjustments...
One of the main financial statements of a nonprofit organization. This financial statement reports the amounts of assets, liabilities, and net assets as of a specified date. This financial statement is similar to the...
One of the main financial statements of a nonprofit organization. This financial statement reports the revenues and expenses and the changes in the amounts of each of the classes of net assets during the period shown in...
Allowing a person or company to purchase goods or services without paying cash at the time of purchase.
See petty cash replenishment.
See cash basis of accounting.
Usually a simple form used by the petty cash custodian in order to document small payments from a petty cash box.
A request by the petty cash custodian for a company check in order to return the amount of currency and coins in the petty cash box to the amount shown in the general ledger account.
A special journal (or specialized journal) used to record money received. In a manual system this will allow one entry to the Cash account for the month (or shorter periods) instead of debiting the Cash account for every...
A current asset account that represents an amount of cash for making small disbursements for postage due, supplies, etc.
? Select... Balance sheet Income statement 10. A debit to Cash Short and Over indicates that the amount of petty cash receipts plus the amount of cash in the petty cash fund was __________ than the amount indicated in...
The general ledger account Cash that reports currency, coins, undeposited checks, and the checking accounts of a company. (Could also be a reference to a customer required to pay cash for purchases.)
See net realizable value.
What is petty cash? Definition of Petty Cash Petty cash or a petty cash fund is a small amount of money available for paying small expenses without writing a check. Petty Cash is also the title of the general ledger...
What is a cash discount? Definition of Cash Discount A cash discount is a deduction allowed by some sellers of goods or by some providers of services to motivate customers to pay within an earlier specified time. The...
See sales discounts.
Cash that can be used only for the purpose intended.
The collection of money (currency, coins, checks). Not to be confused with revenues.
See petty cash receipt.
A miscellaneous expense account used to record the difference between the amount of cash needed to replenish a petty cash fund and the amount of petty cash receipts at the time the petty cash fund is replenished.
An accounting method wherein revenues are recognized when cash is received and expenses are recognized when paid. This method is inferior to the accrual basis of accounting where revenues are recognized when they are...
How can a business increase its cash flow from operations? A business can increase its cash flow from operations (or operating activities) by looking closely at each of its current assets and current liabilities. For...
In the 1970’s the Financial Accounting Standards Board (FASB) articulated three objectives of financial reporting. In summary, financial information should (1) be useful to investors and lenders, (2) be helpful in...
The title of the official pronouncement of the Financial Accounting Standards Board which establishes a new accounting standard.
is earning more than the discount rate. A negative net present value indicates an investment is earning less than the discount rate, but may be earning a positive rate. For example, if the cash flows are discounted by...
or manufacturer. It requires that a cost flow such as FIFO or LIFO be used. cost of goods sold (or) cost of sales This is likely to be the largest operating expense on the income statement of a retailer or manufacturer....
Analyzing financial statements by using financial ratios, horizontal analysis, and vertical analysis. To learn more, see Explanation of Financial Ratios.
A revenue, expense, gain, or loss account. To learn more, see Explanation of Income Statement.
statement amounts are best calculated for a specific period of time by using the accrual basis of accounting. Under the accrual basis the revenues are the amounts that were earned (not the amount of cash received), and...
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