started and You have successfully operated a company for the past 10 yea You have decided that it is time to sell your company and spend time on the beaches of Hawaii. A potential buyer is

Q: Explain consistency concept.

A: Consistency: Consistency principle emphasizes that companies should adhere to same accounting…

Q: Define control decisions.

A: Managerial accounting: Managerial accounting is a system, or a process of collecting and organizing,…

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: Explain “gain contingency”.

A: MEANING OF GAIN CONTINGENCY:- A gain contingency is an uncertain situation that will be resolved in…

Q: The components of the conceptual framework ?

A:

Q: What assumptions underlie the EOQ model?

A: The model that helps in calculating the optimal amount of quantity needs to be purchase for…

Q: Define Intrinsic value.

A:

Q: Define Goodwill.

A: Goodwill refers to the intangible asset which arises when buyer acquires the existing business.

Q: Define due diligence

A: Due diligence is a process by which investor checks all the material facts before entering into any…

Q: Define the term predictive value.

A: Predictive value refers to the fact that quality financial information can be used to base…

Q: Describe the assumptions underlying CVP analysis?

A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…

Q: Define relevant risk

A: For investors, risks are classified into the following two types: Systematic risk/relevant…

Q: Define variable consideration.

A: Variable considerations: Contracts having a degree of variability in the specified transaction…

Q: Define going-concern assumption

A: Definition: Accounting: Accounting is a system, or a process of collecting and organizing economic…

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: Define agency conflict

A: Agency conflict denotes to the conflicts that arise between the agent and Principal. In the finance…

Q: Describe Control Risk

A: Audit Risk: The risk of issuing an unqualified audit report due to failure in detecting material…

Q: What are the key assumptions of the CAPM?

A: Introduction: The CAPM is an equilibrium model that stipulates the relationship between necessary…

Q: Consistency Principal Definition

A: Generally Accepted Accounting Principles (GAAP):These are the guidelines necessary to create…

Q: Define Operational risk.

A:

Q: This focuses on what happens. a. Technical analysis b. Fundamental analysis c. Both fundamental and…

A: Technical analysis focus on the movement of the stock price and use that data to predict the future…

Q: Define the term Net method.

A: As per the net method, the company records the amount of purchase by deducting any potential…

Q: What is the DCF method?

A: DCF is a complex tool for valuation which approximates the value of any investment depending upon…

Q: What is counterbalancing?

A: Errors: The comparability and consistency of the financial statements decreases when a company…

Q: What is sensitive analysis?

A: Sensitive analysis is a method for predicting the outcome of a decision if a situation turns…

Q: Explain prudence concept with example.

A: Prudence principle- According to this concept, businesses should instantly recognize all future…

Q: Define risk

A: Risk can be defined as whenever there are chances that the investments’ actual outcomes are…

Q: Define commitment fee

A: In financial terms, commitment is a promise made by lender to borrower to provide loan by specific…

Q: Define GAP Analysis

A: Gap Analysis is done by the company to fill the gaps and improve the performance of the company.…

Q: Define scenario analysis

A: Scenario means a situation or circumstance which is influenced by various factors. Various if and…

Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.