Explain Prepayment
Prepayment also known as prepared expenses are those expenses which are incurred or paid during the year under audit but relate to the period subsequent…
Accountancy Notes
Divisible Profits
Profit may be defined as follows: 1. Generally speaking the profit of the business during a given period is the excess over the expenditure for…
Describe the rights and Duties of an Auditor in brief
Rights and duties go together. Whatever is demanded by someone as ‘Rights’ is considered justified on the basis of ‘Duties’ he performs. Similar is the…
What is the relationship among an annuity, a perpetuity, and a growing cash stream?
All three are patterns of future cash flows for which simplifying time value formulas have been derived. An annuity is a sequence of equal cash…
What is the relationship between a future value and a present value?
A future value equals a present value plus the interest that can be earned by having ownership of the money; it is the amount that…
Would an increase in interest rates increase the amount of money you saved?
Some economists argue that people increase their savings when interest rates rise since they can earn more money. Suppose you were putting money away with…
A well-known advertisement by American Express urged travelers returning home to keep their travelers checks rather than cash them in.
A well-known advertisement by American Express urged travelers returning home to keep their travelers checks rather than cash them in. The reason given was to…
Why do airlines often insist that you pay for your ticket on the date you book your flight rather than the date you actually fly?
One reason is time value of money¾the earlier the airlines receive the cash, the more valuable it is to them. A second reason is that…
What Can I Learn from Profitability Ratios?
The profitability ratios include: operating profit margin, net profit margin, return on assets and return on equity. Profit margin measures how much a company earns…
When Is an Increase in Earnings a Loss?
Sometimes an increase in company earnings can disguise an operating loss. If a company’s operating expenses exceed its operating income; it has an operating loss….