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What is allowance for probable losses?
Allowance for probable losses is an accounting estimate that reflects the anticipated losses on accounts receivable or other assets due to factors such as defaults or non-collection. This allowance is created to match potential losses with the revenue they relate to, thus ensuring that financial statements accurately represent a company's financial position. It is recorded as a contra asset account, reducing the total value of receivables on the balance sheet. This practice helps provide a more realistic view of expected cash flows and financial health.
Why is goodwill amortized?
Goodwill is not amortized under U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Instead, it is subject to annual impairment testing to determine if its carrying value exceeds its fair value, which can indicate that the goodwill is no longer justified. This approach reflects the indefinite life of goodwill and aims to provide a more accurate representation of a company's financial health. However, if impairment is identified, the goodwill must be written down to its fair value.
Why is it advisable to start with sales then production and thencapital expenditure forecast in the budgeting contolg?
Starting with sales forecasts allows a business to estimate revenue and determine the demand for products or services. This informs production planning, ensuring that resources are allocated efficiently to meet anticipated sales. Once sales and production are understood, capital expenditure forecasts can then be developed to support the required capacity and infrastructure, aligning investments with expected growth. This sequential approach helps create a cohesive budget that reflects realistic operational needs and financial goals.
Should a capital account increase at end of fiscal period?
A capital account should ideally increase at the end of a fiscal period if the business has generated profits, raised additional capital, or retained earnings. An increase reflects better financial health and growth potential, which can attract investors and support future expansion. Conversely, a decrease may indicate losses or withdrawals, which could signal financial challenges. Overall, a growing capital account is generally viewed as a positive indicator of a company's performance.
Which financial statement is reported as of a specific date?
The financial statement reported as of a specific date is the balance sheet. It provides a snapshot of a company's assets, liabilities, and shareholders' equity at that particular point in time. Unlike the income statement or cash flow statement, which cover a period of time, the balance sheet reflects the financial position of the company as of the end date specified.
What reflects the financial position of a company at any given time?
The 'financial statement' reflects the financial position of a company at any given time.
What information is embodied in a budget line?
A budget line embodies key financial information, including the allocation of resources to various categories or departments, projected income, and anticipated expenditures. It reflects priorities by showing how funds are distributed across different areas, such as operating costs, capital projects, and personnel expenses. Additionally, it serves as a tool for monitoring financial performance and ensuring that spending aligns with strategic goals. Overall, the budget line provides a clear picture of the organization’s financial planning and constraints.
What is allowance for probable losses?
Allowance for probable losses is an accounting estimate that reflects the anticipated losses on accounts receivable or other assets due to factors such as defaults or non-collection. This allowance is created to match potential losses with the revenue they relate to, thus ensuring that financial statements accurately represent a company's financial position. It is recorded as a contra asset account, reducing the total value of receivables on the balance sheet. This practice helps provide a more realistic view of expected cash flows and financial health.
What is the role of an auditor in terms of the financial statement?
External Auditor has the role to materially evaluate the financial statements and provide his opinion that 'Does financial statements reflects true and fair activities of business' or not.
What causes a favorable budget variance?
A favorable budget variance occurs when actual revenues exceed budgeted revenues or actual expenses are less than budgeted expenses. This can result from higher-than-expected sales, cost-saving measures, efficient resource management, or unexpected income sources. Additionally, accurate forecasting and effective financial planning can contribute to achieving a favorable variance. Overall, it reflects better financial performance than anticipated.
How much does a certified financial planner make?
As much as he or she is worth. It is a profession where your level of comittment determines your salary. If your lazy you will have a paycheck that reflects that.
What Financial Concept reflects the sooner one receives a return on a given investment the better?
The financial concept that reflects the idea that the sooner one receives a return on an investment, the better, is known as the Time Value of Money (TVM). This principle asserts that money available today is worth more than the same amount in the future due to its potential earning capacity. Factors such as interest rates and inflation further emphasize the importance of receiving returns sooner to maximize investment growth. Thus, earlier cash flows are generally preferred over later ones.
Explain the principle of substance over form and how it limits the financial statement?
Substance over form is an accounting principle used to ensure that the financial statement reflects the complete, relevant and accurate picture of the transactions and events.
The definition of push down accounting?
A method of accounting wherein the financial report of the subsidiary reflects the parents cost incurred in acquiring the sub.
What is RV value?
RV value, or Residual Value, refers to the estimated worth of an asset at the end of its useful life or lease term. In the context of vehicles, it represents the expected market value after depreciation. This figure is crucial for leasing agreements and helps determine monthly payments, as it reflects how much the vehicle is anticipated to be worth when the lease concludes. Understanding RV value aids consumers in making informed financial decisions regarding leasing or purchasing assets.
What describes history writing?
It is done by the winners. Written history generally reflects the viewpoint of those who have won wars or cultural battles.
What is the proper journal entry for recording a tax refund in the company's financial statements?
The proper journal entry for recording a tax refund in the company's financial statements is to debit the cash account and credit the income tax refund account. This reflects the increase in cash from the refund and properly records the transaction in the company's financial records.
