Accrual vs. Cash Basis Accounting Alicia Wiley Grantham University Abstract In this paper I have defined accrual and cash basis accounting. Also‚ I have answered the following questions: Explain the difference between the accrual basis of accounting and the cash basis of accounting. What are the major reasons for using accrual accounting? What are the purpose of a journal and a ledger? Give an example of a contra-asset‚ and explain how it is recorded on the ledger as a transaction. Explain
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History of Fourth Directive Company law directives are published under the authority of the Treaty of Rome (Article 54(3) (g)). The council and the commission want to co-ordinate safeguard to protect the interest of member state and others‚ in such a way that these safeguard are become similar across the EU. The objective of EU is to convey a common market that allows freedom of capital‚ goods‚ persons and services between member countries. EU adopted so many directives which are dealing with accounting
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Principles of Quantitative Methods 2011 Table of Contents Question 1 – Difference between Simple Interest and Compound Interest 3 1.0 Simple Interest 3 1.1Compound Interest 4 Question 2 – Difference between Depreciation by Straight Line Method and Depreciation by Reducing Balance Method 6 2.0 The Difference 6 Question 3 - Standard Deviation and Quartile Deviation 7 Standard Deviation 7 Quartile Deviation 8 3.0 Purpose of Calculating Standard Deviation and Quartile Deviation 8 3
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Question 6B 19 Reference List 24 INDEX OF TABLES AND FIGURES Table 1 Recording of Transaction 4 Table 2 Depreciation Straight Line Method - Summary 5 Table 3 Depreciation Straight Line Method 5 Figure 1 Depreciation Straight Line Method 5 Table 4 Depreciation Reducing Balance Method (3 Year) 6 Table 5 Depreciation Reducing Balance Method (7 Year) 6 Figure 2 Depreciation Reducing Balance Method (7 Year) 7 Table 6 Reducing Balance Method 18.376673% 7 Figure 3 Reducing Balance Method
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straight-line over 5 years and is sold after 15 years at an after-tax salvage value of $3‚250‚000. In this case‚ the NPV is calculated at -$3‚912‚677.91. The next scenario assumes Ocean Carriers is not required to pay any taxes. Using the same depreciation method as in the first scenario and a net salvage value of $5‚000‚000‚ NPV is -$1‚252‚915.52. The difference between the first and second scenarios NPV is completely due to the increased net income that the Japanese firm experiences as a result
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Operating activities - decrease in accounts receivable $76‚000 g) Financing activities - paid dividend (97‚000) Note: this cash outflow may also be classified in operating activtiies if the company wishes. h) Operating activities - add back depreciation 67‚000 i) Operating activities - deduct gain on sale (3‚000) Investing activities - sold capital asset 13‚000 Requirement 3 a) Investing activities - cash paid for capital asset (no change from above) (18‚000) b) Financing activities
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CASE STUDY: SAP FOR ATLAM Case Summary Akademi Teknikal Laut Malaysia (ATLAM) was established on August 1981 and privatized on January 1997. ATLAM was wholly owned organization of MICT Berhad. The mission of ATLAM was to facilitate value added learning and provide excellent services to its client. In year 2001‚ the management had been asked to upgrade accounting system with the PETRA group-wide SAP system. SAP was an integrated business application package that covered most functions of an organization
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Applied Auditing Audit of Plant‚ Property and Equipment – Lecture Definition Property‚ plant and equipment are tangible items that: a) are held for use in the production or supply of goods or services‚ for rental to others‚ or for administrative purposes; and b) are expected to be used during more than one period. Recognition An item of PP&E should be recognised only if its cost can be measured reliably and it is probable that future economic benefits associated with the item will
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is an overhead cost. f is not an incremental cash flow because depreciation is not a cash flow. i is a sunk cost. Est. Time: 01 - 05 2. Real cash flow = 100‚000/1.04 = $96‚154. The real discount rate is calculated as 1 + nominal rate / 1+ inflation rate − 1. Therefore‚ 1.08/1.04 − 1 = .03846. PV = [pic] Est. Time: 01 - 05 3. a. False. A project’s annual tax shield is equal to the depreciation amount times the tax rate. b. False. Financing and investment
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| Expenses: | Other Than Depreciation (75% of revenue) | $8‚000‚000 | Depreciation Expense | $1‚500‚000 | Net Income | | $2‚500‚000 | b. Net Income is $2.5M as shown in part a. The Total Profit Margin is Net Income ($2.5M)/ total revenues ($12M) = Total Margin of 0.208 (20.8%). The cash flow is the net income plus the depreciation costs‚ thus $1.5M (Depreciation Expense) + $2.5M (Net Income) = Cash Flow of $4.0M. c. If the depreciation expense doubled then the Net income
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