In a corporation, the components of contributed capital include the legal capital and other related collections to the stock issued, like the share premium. What about in a sole proprietorship or partnership? Read on for examples of all these cases.
What is an Accrued Expense? “The financial statements are almost finished, Sir,” declares Miss Ballesteros, the secretary. “But there are some accrued expenses that are still computed by one of the clerks.” This article utilizes payroll and taxes as examples and explains how to calculate them.
“Cashflow Payback Period! You are still using it, MIss Perez? Let me tell you one thing: Our competitors have grown fast in a span of two years. Let us consider the time value of money or we will lose resources in another two years,” demands Mr. Howen, the company’s Vice President for Finance.
“Calculate average accounts receivable! That is very easy, Miss Dannison. I just wonder why you need this for our portfolio. Know anything about it?” asks Terry, Miss Dannison’s assistant. “I need the amount for the financial analysis, Terry,” Miss Dannison answers.
How does the accounts payable process work? Miss Moore tells of an old theft. “Against accounts payable, Miss Moore?” asks Mr. Smith, operations manager. “The culprits must have been trusted people and the company must not have had a well guarded accounts payable process! It will not happen again.”
Define Incremental Analysis! “Yes, Mr. Stephens. We can accept the offer of Howard Trading. There is an incremental profit of $7,000 because the incremental revenue of $15,000 is bigger than the incremental cost of $8,000,” says Miss Vargas. “That is good, Miss Vargas,” replies Mr. Stephens.
“I understand fundamental accounts receivable formulas! They are just easy to make,” says Anne, the accountant at RidgeLeg. “Yes, they are, Anne,” replies Mrs. Leghorn, the owner. “And we need them at this time to know how things will be going through.” Let’s look at how they’re used.
“Explain Contribution Margin Analysis! Miss Hanes, I would like you to review the techniques used by our previous financial analyst. Be ready to present your analysis during the next monthly meeting. Do not forget to consider the price and profit targets,” says CEO McHaven.
“Capital expenditure budget? Do you want to say that my request will not be approved because it is not included in that budget, Miss Kelly? What is in that capital expenditure budget?” demands Engineer Lapuz of his accountant. Let’s learn more about capital expenditure budgets.
Both beginning and ending inventory amounts are crucial figures that affect a number of other financial metrics. To make sure these values are as accurate as possible, adjusting entries for closing inventory may be needed.
Fixed Assets! Hench Apparel just purchased a computer package amounting to $800,000 the other month, and Hench has this entered below the standard Return on Investment. But what about the building that was acquired through financing? Let’s take a look at IFRS accounting for fixed assets.
If you want to more closely monitor the profitability of investments, you may want to switch over to using the equity method. We’ll take a closer look at the advantages of this method and walk through a detailed example.
“Adjusting entries? You still have to work on those before presenting the financial statements, Miss Lopez? Are those really so difficult that you cannot assign those to your assistant?” says, Mr. Fox, the owner. Let’s look at categories of adjusting entries to see how Miss Lopez will fare.
When Jewel Corporation undergoes an external audit, a work plan for idle funds is made. “Bond investment for our idle funds?” asks Mr. Canes, the auditor, of the Chairman. “Can we request the auditors to discuss the revisions on the principles for these assets at the exit conference tomorrow, sir?”
When does one shift budgeting methods? Read why Mr. Sonic says, “There is still unfavorable factory overhead variance for October! Whatever suggestions you have there to improve our performance, like a shift from static budget to another method, we will implement them right away!”
What if your company awaits approval of a loan? Maybe your accountant will say, “Sir, I know that our application will be approved. Even though we have monthly uneven cash flows our cash flow statement always shows there are sufficient funds to allow for monthly amortization.” What happens next?
A design consultant tells the company CEO, “Using Standard Costing for your products will increase their market. A 10% increase on the prime cost is still smaller than the 35% increase on your sales. The public will be aware of your quality product later on.” How is this calculated?
Want to know if your planned insurance and real estate investments are positive and worthwhile undertakings when it comes to net returns? Learn how to use the Discounted Cash Flow in forming your decision.