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Actual expense is what something costs. Interest expense is what it costs to borrow the money for an actual expense. No one would borrow money to buy something if the cost to borrow the money was more then the cost of the thing they were buying. *I disagree; over the long run people pay more interest on their home mortgage than the initial cost of the home.
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Why is interest expense said to cost the firm substantially less than the actual expense while dividends cost it 100 percent of the outlay?
Due to the after tax cost of a tax-deductible expense can be computed as the actual expense times one minus the tax rate, because a dividend on common stock is not tax-deductible, we say it cost 100 percent of the amount paid. Shannon Coffey Wayne, MI
Why is interest exspense said to cost the firm substantially less than the actual expense while dividends cost it 100 percent of the outlay?
Due to the after tax cost of a tax-deductible expense can be computed as the actual expense times one minus the tax rate, because a dividend on common stock is not tax-deductible, we say it cost 100 percent of the amount paid. Shannon Coffey Wayne, MI
How do you calculate net income without an income statement?
The standard formula for calculating income is Sales Less Cost of Goods Sold Equals Gross Income Less Selling, General, and Administrative Expenses Equals Earnings Before Interest and Taxes (EBIT) Less: Interest Expense Less: Tax Expense Equals Net Income This is a very simplified version of the calculation. I didn't factor in capital gains or losses or extraordinary items.
A favorable spending variance occurs when the actual cost is less than the amount of that cost in the flexible budget true or false?
True
What is the difference between over costing under costing?
Over costing means charging more costs to items than it's actual cost while under costing means charging less cost then actual costs.
Why is interest expense said to cost the firm substantially less than the actual expense while dividends cost it 100 percent of the outlay?
Due to the after tax cost of a tax-deductible expense can be computed as the actual expense times one minus the tax rate, because a dividend on common stock is not tax-deductible, we say it cost 100 percent of the amount paid. Shannon Coffey Wayne, MI
Why is interest exspense said to cost the firm substantially less than the actual expense while dividends cost it 100 percent of the outlay?
Due to the after tax cost of a tax-deductible expense can be computed as the actual expense times one minus the tax rate, because a dividend on common stock is not tax-deductible, we say it cost 100 percent of the amount paid. Shannon Coffey Wayne, MI
How do you calculate net income without an income statement?
The standard formula for calculating income is Sales Less Cost of Goods Sold Equals Gross Income Less Selling, General, and Administrative Expenses Equals Earnings Before Interest and Taxes (EBIT) Less: Interest Expense Less: Tax Expense Equals Net Income This is a very simplified version of the calculation. I didn't factor in capital gains or losses or extraordinary items.
Is cost of goods sold an operating expense?
Cost of goods sold is opening stock plus purchases of inventories and other carriage costs less closing stock. Cost of sales therefore is not an operating expense...
What is favourable?
A favorable variance is the difference between the budgeted or standard cost and the actual cost. If the actual cost is less than budgeted or standard cost, it is a favorable variance.
Where the actual cost is found to be less than standard cost is known as?
favourable variance
What is favourable variance?
A favorable variance is the difference between the budgeted or standard cost and the actual cost. If the actual cost is less than budgeted or standard cost, it is a favorable variance.
How long is a flight from Birmingham to Nashville?
The actual flight time is about 20 minutes. Given that you can drive to Nashville in less that five hours, the three hours time to get cleared through the airport and the flight plus the expense of transportation on the end of the flight, it might be in your best interest to drive.
Why does 5 interest on a bond cost a firm less than a 5 dividend on its common stock?
The most common reason pointed to is: Interest is an operating expense and is tax deductable to the company paying it. Hence, they lower the tax they would have paid by their effective tax rate on the amount of interest they pay, which is similar to getting a lower rate. Say $100 of interest paid and a 35% corporate tax rate - a $35 tax savings (or reduction)is realized. essentially, only a $65 expense after benefit incurred. With certain uncommon exceptions, Dividends are paid from after tax earnings and are not deductable expenses. Pay $100 and the cost, (actually taken from the value of the company) is reduced by $100.
Why do real estate prices tend to increase when interest rates fall?
Because with lower interest rates, the cost of borrowing money is less.
A favorable spending variance occurs when the actual cost is less than the amount of that cost in the flexible budget true or false?
True
The book value of an asset is the a market value of te asset b. portion of the asset's cost that has not yet been charged to expense c acquistion cost shown in the asset account less the estimated sa?
Option B is correct one and that is the portion of the asset;s cost that has not yet been charged to expense.
