Accounting

All other outlays may occur at any point in the project’s life, and these are factored into the calculation through the use of discounting in the numerator. These additional capital outlays may factor in benefits relating to taxation or depreciation. To calculate the profitability index formula, we need to know the present value of the expected cash flows and the initial investment.
The profitability index indicates whether an investment should create or destroy company value. If the PI i […]

Learn the details of traditions vs activity-based costing, and the formula demonstrated in a set of examples. You’ve probably heard people banter around phrases like “P/E ratio,” “current ratio” and “operating margin.” But what do these terms mean and why don’t they show up on financial statements? Listed below are just some of the many ratios that investors calculate from information on financial statements and then use to evaluate a company. Eva […]

This may involve bringing performance levels up to their original level from when an asset was originally acquired, or merely maintaining the current performance level of an asset. Expenditures required to increase the performance level may result in the capitalization of the additional costs. For example, replacing the oil filter in a truck is considered a maintenance cost, while replacing the roof of a building extends the life of the building, and so its cost will be capitalized.

Carpet rec […]

This is especially true if you do not plan on using any software and would prefer to use Excel spreadsheets to manage your leases. However, we believe managing your leases in Excel leaves too much room for error. The minimum lease payments are the amount the lessee is expected to pay over the term of the lease. Since the value of money decreases each year due to inflation, accountants measure the present value of the minimum lease payments to determine how much the lease will cost in today&#821 […]

Bookkeeping can be time-consuming, and outsourcing your financial activities allows you to focus on developing your startup. When manually doing the bookkeeping, debits are found on the left side of the ledger, and credits are found on the right side. Debits and credits should always equal each other so that the books are in balance. […]

There may be equal increases to both accounts, depending on what kind of accounts they are. Accordingly, the following rules of debit and credit in respect to the various categories of accounts can be obtained. There are two different approaches to the double entry system of bookkeeping. They are the Traditional Approach and the Accounting Equation Approach. Irrespective of the approach used, the effect on the books of accounts remain the same, with two aspects in each of the transactions. Most […]