1. The Income statement for sole proprietor shows income less expenses 2. There is no taxation shown3. The profit will be posted to the capital account in balance sheet / statement of financial statement 4. Note that the title is “income statement FOR THE PERIOD ….” because income statement captures the whole year activity. 5. This is in …
The corporate objective of a manager in the study of finance is to: 1. Maximise the value of the company (ensuring high future cash flow)2. Maximise shareholder wealth (ensuring high stock price)Rationale:•Individuals are utility maximisers•Utility is a function of consumption•Consumption is a function of wealth•Utility maximising individuals wish to maximise their wealth•Individuals hold part of their wealth in the …
1. Balance sheet has only one capital account 2. Profit (or loss) added (or subtracted) to capital account (in balance sheet)3. Net assets and total equity has to tally ($14,200)3. The profit is from the income statement4. Note that the title is “Statement of Financial Position as at ….” because the value of the assets / liabilities …
Partnership Statement Profit and loss is split according to original capital contributions or as agreed Profit and loss is after deduction of the salary owed to the partners (partners are usually paid salary if they are active in the business or as per agreed in the partnership agreement) No taxation is shown Difference between partnership …
Partnership Statement of Financial Position There is a capital account and current account for each partner Partners’ equity accounts may be totalled together with original contribution or separated as in this example. In this example, there are 3 current accounts showing the total received from the business by each partner. The 3 capital accounts …
The profit after tax can be either: (1) distributed to shareholders as dividends or(2) retained in the companies for future growth as retained earnings or retained profits In this case, we can see that even though the profit after tax was $53 550, only $48 550 is shown as retained earnings.The difference has probably …
1. Economics is the study of how to a. completely satisfy our unlimited wantsb. do the best we can with what we havec. reduce our unlimited wantsd. increase our economic resources 2. Macroeconomics is the study of _________________. a. big businessesb. the choices that individuals and businesses makec. the national economy and the global economy as …
Question 1 $100 to be received at the end of 3 years is worth how much today, assuming a discount rate of a)10 per cent b)100 per cent c)0 per cent?Question 2At the end of 5 years, how much is an initial $500 deposit plus annual $100 payments worth, assuming an annual interest rate of a)10 per cent b)5 per …
Time Value of Money takes into account the present and future value of money when there is opportunity cost in the economy. Opportunity cost include the returns you would have gotten if you have invested the money somewhere else rather than keeping it under your bed. For instance, if I put $1000 into Bank A that offers …
SHORT ANSWER QUESTIONS: 1) Your friend is celebrating his 35th birthday today and wants to start saving for his anticipated retirement at age 65. He wants to be able to withdraw $10,000 from his savings account on each birthday for 10 years following his retirement; the first withdrawal will be on his 66th birthday. Your …