0
Stocks are not cash or income, they are an asset. Once they are sold, the value is "realized" in terms of income.
Wiki User
∙ 7y ago
Add your answer:
Earn +20 pts
Are there circumstances in which income is recognized even when a cash basis taxpayer does not receive cash?
Yes, it may arise on unrealised profit on unsold stocks, profit element of upward review of assets.
Is renting out machinery considered income?
Yes even if you do it for cash.
Can you get a car with no income?
If you have cash or money in the bank or even under your mattress , you can get a car.
What is quick cash flow and is it a good idea to invest in it?
A quick cash flow is irrelevant at this point. Invest in cash flow. Yes stick with traditional stocks and bonds , even though there are easier electronically ways to to do that, and increase your earning in that process.
Why is it not a good idea to rely on your income statement to run your business?
The income statement deducts noncash expenses, such as depreciation, even when no cash is actually flowing out of the business.
Explain the relationship between liquidity and profitability for a bank?
Profitability is the difference between income and expense. Liquidity is the ability to turn assets in to cash quickly. Vault cash is the most 'liquid' asset. Stocks and bonds are liquid because they can be sold immediately; real estate is 'illiquid' because it may take a long time to sell. Note that 'liquid' does not mean you can sell at a profit, or even at fair market value, just that it can quickly and easily be sold for cash.
Can You Retire on the Highest Dividend Paying Stocks?
Planning for retirement is not easy. Some people will add up a lump sum figure of cash they would need to live on during their retirement years. They may annualize their monthly expenses, then multiple this figure by the number of years they expect to spend in retirement. When adjusted for inflation, this figure can seem astronomical. While living off of a lump sum of cash that you have saved up is one way to plan for retirement, another method involves creating streams of income that you can live off of. Buying the highest dividend paying stocks and living in part off of dividends is one strategy to consider.How Much Can You Earn Off of DividendsIt is entirely possible to live off of dividends. Dividends are typically paid out quarterly, and they can be used as a sole source of income or in conjunction with other sources of income such as Social Security, rental income from real estate investments and more. In order to determine if this is a feasible option for you to consider, you first have to consider how much money you can earn off of dividends. Few people will want to invest all of their cash into a single stock, so determining how much income you can obtain through your stock purchases can be difficult. You may decide to invest in ten or even twenty different stocks in order to minimize risk. With some basic calculations, however, you can do the math and figure out how much income you can generate for yourself now and into the future.Stocks to ConsiderIf your goal is to live off of dividend income, you should pay attention to the highest dividend paying stocks as well as those stocks that have a history of having a stable or generally increasing dividend amount. Consider that companies can decrease or revoke their dividends entirely and without notice. If this happens, you can certainly sell those stocks and buy other stocks. However, you do want to avoid this altogether as it can affect your income. To avoid this, consider those stocks that have a stable dividend history over at least the last decade or so. The more reliable a company's dividend history has been, the more reliable that income source may be for you. Keep in mind that is it best to diversify your income as much as possible in retirement to minimize risk.
Money you loan as an expense?
No, it is neither an expense to you or income to the recepient. Loans are investments, even in a personal sense, a balance sheet, not income statement item. The (presumably cash/money) asset is offset by having an asset of another type....normally a receivable or investment ...it just isn't cash. (The borrower receives cash asset and has a corresponding liability of the payable). The income, presumably interest, on the loan is income. If the loan/investment isn't paid, and meets the qualifications for being a bad debt, the amount not repaid is an expense.
Is depreciation a source of fund?
Some people state that depreciation is a source of funds or a source of cash. I disagree. Depreciation expense is reported as a positive amount on the statement of cash flows prepared under the popular indirect method. However, the reason it is listed is to adjust the net income amount that had been reduced by depreciation expense on the income statement. (Recall that the depreciation entry debits Depreciation Expense and credits Accumulated Depreciation-the cash account is not involved.) In other words, the positive depreciation amount reported on the statement of cash flows is merely one of the adjustments needed to convert the accrual net income to the cash provided from operating activities. Depreciation is not a source of cash. Let's illustrate this with some amounts. A sidewalk florist operates a cash only business. During the most recent year, this florist had cash revenues of $100,000. Its expenses included $70,000 of cash expenses and $8,000 of depreciation expense on its truck that was purchased in an earlier year. During the year there were no other revenues or expenses, and the florist's cash balance increased by $30,000. The florist's income statement will report net income of $22,000 (revenues of $100,000 minus expenses of $78,000). The florist's statement of cash flows prepared under the indirect method will begin with net income of $22,000. It will then add the $8,000 of depreciation expense. The result is cash provided by operating activities of $30,000-which agrees to the business's change in its cash balance. The $8,000 of depreciation expense was not a source of cash, even though it appears as a positive amount on the statement of cash flows.
Can you buy a new car base just on your income and not your credit?
If you're paying cash for it, sure. They won't even care about your income.Otherwise, nope, they're going to check your credit, because that actually has a lot more to do with how they can expect you to repay the debt than your income does.
Is it impossible for individual stocks could be highly efficient but the market for whole companies be less efficient?
Yes. Any individual stock may be priced appropriately based on future free cash flows. However, stock markets are just indices. And some stocks have more of an impact than others. And if those stocks are mispriced, the stock market will be mispriced, even though some members of the index may be correctly priced. However, if all stocks of an index are priced appropriately then the index will be priced appropriately.
How do you lower break-even point?
by purchasing stocks at various prices
