What is installment credit? (0.5 points) Loan repaid with interest owed, in equal periodic payments of principal and interest 4. What is revolving credit? (0.5 points) a credit plan that imposes regular repayments and a predetermined spending limit 5. What is noninstallment credit?
(0.5 points) Simple interest is gained only on the principal amount of an account. What is compound interest? (0.5 points) Compound interest is interest that is added to the principal in the account, so that the interest you receive starts to generate its own interest. What is the time value of money? (0.5 points) The time value of money is the assumption that money is worth more the sooner it is received.
What is a projection? (0.5 points) Process of moving forward in time through estimates based on certain assumptions or past trends. 5. What is a will? (0.5 points) A will is a legal document that lets you decide who should receive which of your assets after your death.
Legal or contractual obligations can also help determine the useful life of an intangible asset. A patent has a 20 year term. When the useful life of the patent is determined for accounting treatment, it will be the lesser of 20 years or the amount of time the patent is expected to generate cash flows for the company. Costs associated with the patent may be capitalized over the useful life determined. Research and development costs incurred related to the patent are not eligible to be capitalized.
(5) So the distinction between hobby and business is important to determine the taxability of the profits earned from such activity. The nature of activity shows that it is a business. By classifying it as a business, you will be able to deduct the associated expenses on Schedule C. The IRS will make use of the “3 of 5” rule to determine if it is a hobby or a business i.e. if the business has made profits in three out of past five consecutive years. 2(d) Yes, it would be better as you can claim first year expense deduction for equipment purchased, claim expenses and deduct your business losses.
Why do people take speculative risks? (0.5 points) People take speculative risks because you have a possibility of profit or gain. 3. What is meeting the deductible? (0.5 points) Meeting the deductible is when you have paid the deductible amount and the insurance company now has to pay some or all of the costs above the amount.
What are the incremental cash flows for the project in years 1 through 5 and how do these cash flows differ from accounting profits or earnings? In business finance there are a number of different cash flows. Caledonia will use the following incremental cash flows for this project in years 1 through 5: Net initial investment outlay. The is outlay is comprised of cash expenditures, changes in net working capital, net cash flow from the sale of existing or old and non-useful equipment, and investment tax credits. Net operating cash flow.
Make or buy decision a. Be able to identify relevant costs and benefits b. Be able to prepare a financial analysis and make a decision c. Compute the impact of outsourcing on the company’s overall profits 7. Special orders a. Be able to identify relevant costs and benefits; understand the decision rule b.
Annual interest on the debentures will accrue at a floating 5% premium over the prime rate. The right to receive interest payments will be cumulative; that is each debenture holder is entitled to past and current interest payments before DLK’s board can declare a common stock dividend. The debentures would be both nontransferable and noncallable. Lacey, Kaylee and Doug have asked you, their tax accountant, to advise them on the tax implications of the proposed financing agreement. After researching the issue, issue your advice in a tax research memo.