Finance Management (Discussion Questions)
Explain the difference between the accrual basis of accounting and the cash basis of accounting. What are the major reasons for accrual accounting? How are revenues defined under accrual accounting?
First Student
In the words of Snyder (2008), "the difference between cash and accrual basis accounting has to do with the time frame in which revenues and expenses are recorded and reported." According to the author, revenues when it comes to the cash basis of accounting are recorded on receipt. This could be before or even after the said revenues are earned. On the other hand, revenues as per the accrual accounting approach are recorded once they are earned (Snyder, 2008). This could be before or after the said revenues are received. Next, when it comes to the cash basis of accounting, expenses according to Snyder (2008) are recorded on payment. This could be before or even after they are incurred. On the other hand however, under accrual accounting, expenses according to the author are recorded on being incurred -- which could either be before or after they are paid.
It is important to note that there are a number of reasons for accrual accounting. To begin with, accrual accounting ensures that a specified financial period's charges and income are recorded (in actual terms) as being part of that particular financial period. Accrual accounting also allows for the appropriate disclosure of liabilities and assets. By following the matching principle, accrual accounting also essentially contributes towards the presentation of a true picture of a business entity's sustainability and profitability for any given period.
Revenues on this front according to Norton, Diamond, and Pagach (2006)...
Although a corporation has developed successful marketing strategies to sell the products it is producing, its marketing plan will probably be a limiting factor in attaining its set objectives, this necessitates the need to have a good sales force to help in the process of acquiring able personnel to be among the corporation's future customers and boost sales. The outline includes the character, welfare, knowledge, training and inspiration of the
28% This gives project B. An IRR of -0.028% Part C Using the above assessments each may indicate which investment may be preferred. Using the payback period project a has a payback period of 4 years, whereas project B. has a payback period of 3 years 8 months. If the fastest payback period is preferred than project B. will be chosen. The NPV which discounts the net revenues into a net present value shows
Finance One difference between industries with high leverage and low leverage is a split between the need for fixed assets (high leverage) and a reliance on intellectual capital (low leverage). Airlines need planes, construction companies need equipment, and communications and hotel companies need infrastructure capacity. This compares with computers, drugs, biological products, educational services and electronics, all of which rely heavily on intellectual property to derive value. The conclusion that one
Finance Long-Term Financial Planning and Nike For any company to be successful it is essential that the company and its' management determine what they are going to do, and how they are going to do it; this is the very core of strategic planning (Lynch, 2011). Part of this is the setting of long-term goals and objectives in a financial planning context. The importance of the long-term goal setting and objective setting
58 (YHOO), 13.38 (NKE) and 8.15 (BA). There are many explanations for the differences between the P/E ratios of these companies. One is the expected rate of growth. Each of these companies is operates mainly in one market, and is either the dominant player or in an industry with only one other major competitor. Some of the factors that contribute to the growth rate will contribute to differences in the
Managing Out -- the Public Sector in the Community Two major economic positions have dominated the public sector for more than a decade. One side believes that the government should take primary responsibility for the welfare of its citizens, while the other contends that greater reliance on the private sector is the method by which an economy can be more effectively managed. The first idea has largely been gleaned from the
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now