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Issuance of debendutres is not an operating activity that's why interest on debenture is also a non operating expense

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11y ago

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Where is Depreciation Expense on the income statement?

Depreciation Expense is typically listed on the income statement as an operating expense, usually found within the section detailing operating expenses or costs of goods sold, depending on the nature of the business. It reduces the company's operating income and is subtracted from total revenue to calculate net income. This expense reflects the systematic allocation of the cost of tangible assets over their useful lives.


What are the reasons for the creation of debenture redemption reserve fund?

Indian Companies Act of 1956 added during an amendment in the year 2000. It states Indian company that issues debentures must offer debenture redemption service to protect investors against the possibility of company default. If a company does not create a reserve within 12 months of issuing the debentures, they will be required to pay 2 percent interest in penalty to the debenture holders. Only debentures that were issued after the amendment in 2000 are subject to the debenture redemption service.


Is Interest Receivable current asset?

Yes, Interest Receivable is considered a current asset. It represents the amount of interest income that has been earned but not yet received, and it is expected to be collected within the operating cycle or within one year. As such, it is classified on the balance sheet alongside other current assets like cash and accounts receivable.


Is a prepaid expense an operating asset?

Yes. the are counted as a non-financial asset.A prepaid expense is a considered an asset because it entitles the company to receive a benefit in the future. They are normally classified as a current assets because usually the benefits will be obtained within a year or a business cycle; whichever is longer.


Where is warranty expense stated on the income statement?

There is no clear accounting guidance under US GAAP and as such it is considered to be a policy election that needs to be disclosed within the footnotes and applied consistently. Warranty expense can be included as part of Cost of Sales or Operating Expenses. If you review public company financials you will see a 50/50 split.


When do you record warranty expense?

When its returned within the warranty period.


What are the operating expense accounts?

Operating expense accounts are categories within a company's financial statements that capture the costs of running day-to-day business operations. Common accounts include salaries and wages, rent, utilities, marketing expenses, and office supplies. These expenses are crucial for assessing a company's profitability and operational efficiency, as they are deducted from revenue to determine net income. Properly managing these accounts helps businesses control costs and optimize financial performance.


XYZ Corp sells its bonds at a premium and applies the effective interest method in amortizing the premium.Do you think the annual interest expense will increase or decrease over the life of the bonds?

It really depends on how much is the premium paid. Effectively if the premium paid is higher than the par value of the bonds issued, the annual interest expense would be relatively lower. Another perspective is that since that both the bonds and its premium uses effective interest method, considering all factors remain the same, the annual interest expense will remain unchanged. Premium of the bond should be captialized within the holders of the bonds and amortized over the years in which the manner best represents. Issuer of the bonds generally do not captialize the premium of the bond separately. You should also note that the bonds issued are not compound financial instruments or contain any embedded derivates.


What type of an account is a purchase?

contra-expense It's an expense, not a contra expense. If you don't pay the bill within the discount period, and you had recorded the original purchase at net (Purchase price less the early pay discount) then you have more expense, not less, when you don't pay on time.


What type of an account is a purchase discount?

contra-expense It's an expense, not a contra expense. If you don't pay the bill within the discount period, and you had recorded the original purchase at net (Purchase price less the early pay discount) then you have more expense, not less, when you don't pay on time.


Is it true an application run within an operating system?

Nope - the Operating System is a closed program. Applications run as independently as 'extensions' to the core Operating System.


What are 5 example of nominal account?

Nominal accounts, also known as temporary accounts, are used to track financial transactions over a specific period and are reset at the end of that period. Examples include revenue accounts (like Sales Revenue), expense accounts (such as Rent Expense), gains (like Gain on Sale of Assets), losses (like Loss on Sale of Investments), and interest income (Interest Earned). These accounts help in measuring the company's performance within an accounting period before being closed to equity accounts.