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What are the main elements in calculating cost of capital How would an increase in debt affect the cost of capital How would you identify the optimal cost of capital for an organization?
Capital is calculated by subtracting the business costs from the profits gained from products and services. An increase in debt would decrease the total capital by increasing business costs. The optimal cost of an organization is low debt and high credits.
Is utility expense is a credit or debit?
An increase in any expense is a debit entry, so if your were recording the amount paid for a utility expenditure, the entry would be: Dr Utility expense (representing an addition to this expense account) Cr Cash (representing an outflow (decrease) in cash)
The transaction would increase an asset account and increase a liability account?
The transaction would increase an asset account and increase a liability account?
When the corporation was formed on september 1 2014 common shares were sold to uncle bob for 9200 cash how do these affect the accounting equation and what specifically?
I think you mean accounting equity? The $9,200 would be split in equity between "capital stock" (the par value of the stock) and in "additional paid in capital" (the amount the stock was purchased for less the par value).
What is the effect of a purchase of inventory on account on the current ratio and on working capital respectivelyAssume a current ratio greater than one prior to this transaction?
Purchase of inventory can either be on cash or credit. In the first case, while the value of your inventory would increase, your bank balance would decrease, leading to no change in the current assets and, therefore, no change in the current ratio as well. If goods are bought on credit, while your current assets will increase, so will your current liabilities (as you now owe creditors more), leading to no change in the current ratio, again. Due to the same reasons, whether the purchase was on cash or credit, the working capital also remains the same. If bought on cash, the value of inventory increase while cash decreases, leading to no change in the total current assets and, thus, no change in working capital. If goods are bought on credit, current assets increase and also current liabilities, leading to no change in the working capital, again.
Does an increase in accounts receivable create a cash outflow?
Yes increase in accounts receivable creates cash outflow or reduction in cash as if instead of credit sales it would be cash sales then there would be cash received which increases the cash.
What is the disadvantage of regular outflow?
With regular outflow, there would be shortage of capital,causing hidrance to regular running of business. With adequate inflow, regular outflow is always unwelcome and disadvantagous to business, for reason cited above.
Do drawing decrease the capital of owner?
Yes, it's the opposite of capital introduced which would increase it.
How you can treat capital work in progress in cash flows statement?
This would be treated as cash outflow in investing activities ....indirect method of cashflow statement ..Regards Aurangzaib Iqbal ACCA
What are the main elements in calculating cost of capital How would an increase in debt affect the cost of capital How would you identify the optimal cost of capital for an organization?
Capital is calculated by subtracting the business costs from the profits gained from products and services. An increase in debt would decrease the total capital by increasing business costs. The optimal cost of an organization is low debt and high credits.
A company that wanted to increase its capital through equity financing would most likely get involved in what?
1. A company wants to increase capital using equity financing will involve in issuing share capital to public for subscription.
What is the effect on wrong treated revenue expenditure as capital expenditure?
The effects it would has on net profit and net asset is that there would be an increase in net profit and an increase in net asset as well
What is the effect on wrong treated capital expenditure as revenue expenditure?
The effects it would has on net profit and net asset is that there would be an increase in net profit and an increase in net asset as well
How would your mass and weight change if you went to Jupiter?
Your mass would not change... it's a constant. However, your weight would increase, because the force of gravity (directly related to the mass of the planet) would increase substantially. (Gravitational force is directly proportional to the mass of the two objects in the field, and inversely proportional to the square of the distance between them). You can thank Newton for that equation.
A company that wanted to increase its capital through equity finacing would most likely get involved in which ofthe followig?
Stock market
How do you convert water flow in litres per min to pressure in bar?
The relationship between pressure and flow is given by Bernoulli's law. In an idealized system, the speed increases with the square of the increase in pressure. The flow rate would be given by multiplying the area of the outflow by the speed.
Is utility expense is a credit or debit?
An increase in any expense is a debit entry, so if your were recording the amount paid for a utility expenditure, the entry would be: Dr Utility expense (representing an addition to this expense account) Cr Cash (representing an outflow (decrease) in cash)
