The common methods of a chart of accounts include Accounting types – assets, liabilities, equity, revenue, expenses and revenue, followed by order of liquidity, and the account numbers. How does the order of liquidity apply to the balance sheet? The order of liquidity exclusively applies to those accounts in the balance sheet that can be liquidly turned in cash, expenses and revenue accounts are exempt. a good example of liquidity are U.S. bonds and common stocks, some believe that real estate might be a good one , but it is not , property prices can be under valued forcing to sale under actual
| | | Establishes a market value for the firm. | | | Makes it easier for owner-managers to engage in profitable self-dealings. | 8 points Question 2 Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the Answer | | residual value as a fixed asset. | | | residual value as a liability. | | | present value of future lease payments as an asset and also showing this same amount as an offsetting liability.
The direct method is relies on changing the contractual characteristics of Asset and Liabilities to reach a particular duration and maturity gap to get over any Asset and Liability mismatch. On other hand the synthetic method relies on using derivatives such as interest rate swaps, future, options and other customized instruments like AIRS. Since the direct method is not always possible using the synthetic method give higher degree of flexibility to Asset –Liability management process. Banc one can use the following financial instruments ( off –balance sheet) to hedge against interest rate risk : • Futures : is an agreement between buyer and seller to exchange a specific amount of financial products at a specific price in a specific future date. The management must be very careful to follow the regulatory and the accounting rules that govern the use of future contract.
a. Opportunities: investment opportunities; enhancing revenues (global branding, marketing flexibility, advantages of scale and scope); reducing operating costs (low cost materials, labor, flexibility in global site selection, flexibility in sourcing and production, economies of scale and scope, economies of vertical integration); multinational business strategy (following the customer, leading the customer, following the leader, going local) b. Risks: differences in legal, accounting, and tax systems; differences in personnel management (i.e. HR practices); differences in marketing; differences in distribution; differences in financial markets; differences in corporate governance 2. Given the following Euro to $ Exchange rate of 1.46, what is the information contained in this quote?
For federal taxation purposes, the proceeds received by the investor company in a proportionate redemption are taxed as dividends by applying the effective intercorporate dividend tax rate. In 1983, that tax rate was approximately 6.9 percent. Berkshire also chose to treat the proceeds from the redemption of the GEICO stock as dividend income in its 1983 financial statements. Berkshire’s audit firm, Marwick, Mitchell & Company, approved that accounting treatment. In 1984, another company in which Berkshire had a significant equity
(Exhibit 2.7) At interest rate above i, there is a surplus of loanable funds. At interest rate below i, there is a shortage of loanable funds. When a disequilibrium situation exists, market forces should cause an adjustment in interest rates until equilibrium is achieved. If the prevailing interest rat is blow i, there will be a shortage of loanable funds. The shortage of funds will cause the interest rate to increase, resulting in two reactions: 1.
| Financial risk is the additional risk that common stockholders face as a result of the decision to finance with debt. | Example | Introduction of new product or services in the market. | Percentage of equity financing and debt financing in the company’s capital structure. | Affecting Factors | Variability in the product demand and production costs. | Quality of financial system in which country the company is operating, i.e., how available debt is.
Case Report on Dual Digital Media CRN 30525 - Payroll Management Processes Mt. Royal University – Continuing Education Date:Jue 7,2010 CASE SUMMARY Dual Digital Media is a Canadian based technology business which originally started as a family computer company that has become an international provider of digital media in different forms. The company operated in three (3) Canadian provinces and has expanded its operations nationally and internationally through the acquisition of smaller firms of similar vision. In conjunction with these acquisitions DDM has acquired a range of payroll processing methods, systems, pay cycles and reporting structures. Currently 11 staff assist with payroll delivery for 1238 staff at 5 different site locations.
|Assets |Balance sheet item | |Equity |Balance sheet item | |Reserves |Balance sheet item | |Long-term debt |Balance sheet item | |Change in long term debt | | |Short-term debt |Balance sheet item | |Change in short-term debt | | |Net Sales |
Taxpayers have the incentive to try to pay as little tax as possible in order to maximize their wealth. The IRS may choose to negate certain matters under the Sham Transaction Doctrine. Corporate taxation law is constantly growing and adapting which make the validity of these transactions even less clear.