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Capital budgeting is determined by EAC, the Equivalent Annual Cost. The EAC is the annual cost of owning an asset for as long as it is usable.

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What is the meaning of capital cost?

what is capital cost


What is the meaning of the term 'bank capital'?

"Bank capital" is the net worth of the bank, or its value to investors. It includes retained earnings, reserves, hybrid capital instruments, subordinated term debt.


What are the basic elements of accounting and their meaning?

The basic elements of accounting are assets liabilities and capital and they all have meaning. Assets are the resources that a company owns and utilizes for the business. Liabilities are simply obligations or debts that the company owes. Capital on the other hand is the money that is invested in the business in order to generate revenue.


Can additional paid-in capital have a debit balance?

When there is loss in the business the capital of partner can be in negative. Then there is need for addition of capital to run the business and capital brought can still be not enough to make it in credit. Hence the capital will still show a debit balance. However, Additional Paid-In Capital as an account has meaning only for the corporate form of business. Any amount paid by an investor for stock in excess of the stock's par value is recorded as Additional Paid-In Capital. Additional investments by partners may be recorded as contributions in the current period, but are then, like partner draws, closed to the partner's capital account.


What is the entity and proprietary concepts of capital?

The entity concept of capital refers to the idea that a business is a separate legal entity from its owners, meaning that its capital is distinct and not personally liable to the owners' debts. The proprietary concept, on the other hand, focuses on the ownership perspective, considering capital as the owners' stake in the business, which represents their claim on the assets after all liabilities are settled. Together, these concepts help in understanding the financial structure and ownership dynamics of a business.