Leverage permits superior possible returns to the investor than otherwise would have been obtainable but the probable for loss is in addition superior, since the investment becomes valueless, the loan principal and all accumulated interest on the loan still need to be paid back (Kotarski, 2009). In monetary economics it has been projected for a long time that financial capital is put into a company each time the probable return

Accounting and Finance Determine the costs that should be capitalized in the machinery account Capitalization is the act of recognizing costs that provide a future economic benefit by setting up an asset account (Power Point). The costs that should be capitalized include: Cost of raw materials used during trial runs of machinery $1,000 Additional materials, lumber, steel, and other supplies needed in installation $35,400 Wages paid to company employees to help unload and install the

Accounting and Finance Solving Problems Solutions P4-5: Microsoft Statements of Cash Flow 1999-2001 The Microsoft Corporation uses the indirect method to prepare the statement of the cash flow. The cash flow by operating activities is prepared by reconciling from the net income to the net cash. As being revealed in the Microsoft statement of cash flow, the net income, depreciation, amortization, account receivables and others are used to arrive at the net

This is mainly because some funds are earned over time across different transactions making them to be recorded as adjustments. In some cases, earnings are not accounted or recorded since the revenue was earned even though the cash was not received (Frenz, n.d.). During the period of accounting, accountants usually account earnings and profits in informal ledgers. This data is later transferred to informal worksheets or formal accounting statements at

Accounting From an investor's perspective, what is the most important information on the income statement? Why? From management's perspective, what is the most important information on the income statement? Why? The income statement, also called the profit and loss statement is the financial statement that details a company's sales and earnings. When evaluating an income statement, the savvy investor usually wishes to maximize his or her immediate or long-term ability to make

Accounting Theories and Business Decisions: The Business World Case Facts Application of theories Other cases of stakeholder theory application Accounting theories and business decisions: The business world There are many theories that explain the complexity of relationship between different groups of people directly and indirectly related to an organization. Two of the most comprehensive and most discussed theories are stakeholder theory and agency theory. Both the theories describe what the main purpose of each group