
Money: A generally accepted medium of exchange to make legal payments with a standard value and measuring capacity is termed money.
To determine the time value of money and the reason for understanding the accounting concepts by the accountants.

Explanation of Solution
Time value of money: Time value of money is the worth of funds after a certain period.The value of the funds increase based on the worth of the purchased item. If the funds are invested tactically after a thorough knowledge of where it is being invested, it will give high returns and if they are invested without any plan, there are chances for the worth of money being lost.
Time plays an important role in multiplying the worth of funds. Longer-period investments lead to greater returns or sometimes might act as a cost.
Justification: Accountants come across various transactions and numerous types of business events. Therefore, a thorough knowledge in compound interest, present value, and annuities is required.
Normally, the accountants apply the knowledge of the time value of money in the following:
- Estimating the fair value of an asset
- Calculation of notes receivable/bills receivable
- Calculation of notes payables/bills payable
- Estimating the value of sinking funds
- Finding the long-term worth of an asset
- Calculation of pension funds
- Calculating the instalment contracts
- Estimation of lease value of an asset
The time value of money helps in the assessment of the worth of funds after a certain period. The worth of the money helps in determining about the investment. It exhibits whether the investment is a good one or not.
Want to see more full solutions like this?
Chapter 6 Solutions
INTERMEDIATE ACCOUNTING W/ WILEYPLUS >
- Journalize these transactions, also post the transcations to T-accounts and determine month-end balances. Finally prepare a trail balance.arrow_forwardSuppose during 2023, BlueStar Shipping reported the following financial information (in millions): Net Sales: $40,000 Net Income: $150 Total Assets at Beginning of Year: $26,000 • Total Assets at End of Year: $24,800 Calculate the following: (a) Asset Turnover (b) Return on Assets (ROA) as a percentagearrow_forwardPlease fill all cells! I need helparrow_forward
- Hilary owns a fruit smoothie shop at the local mall. Each smoothie requires 1/2 pound of mixed berries, which are expected to cost $5.50 per pound during the summer months. Shop employees are paid $7.00 per hour. Variable overhead consists of utilities and supplies, with a variable overhead rate of $0.12 per minute of direct labor time. Each smoothie should require 4 minutes of direct labor time. Determine the following standard costs per smoothie: Direct materials cost Direct labor cost Variable overhead costarrow_forwardgeneral accountingarrow_forwardThe following financial information is provided for Brightstar Corp.: Net Income (2023): $500 million Total Assets on January 1, 2023: $3,500 million Total Assets on December 31, 2023: $4,500 million What is Brightstar Corp. _ s return on assets (ROA) for 2023? A. 11.80% B. 12.50% C. 13.20% D. 14.00%arrow_forward
- PLEASE FILL ALL CELLS. ALL RED CELLS ARE INCORRECT OR EMPTY.arrow_forwardAssume Bright Cleaning Service had a net income of $300 for the year. The company's beginning total assets were $4,500, and ending total assets were $4,100. Calculate Bright Cleaning Service's Return on Assets (ROA). A. 6.50% B. 7.25% C. 6.98% D. 5.80%arrow_forwardwhat is the investment turnover?arrow_forward
- A California-based company had a raw materials inventory of $135,000 on December 31, 2022, and $115,000 on December 31, 2023. During 2023, the company purchased $160,000 worth of raw materials, incurred direct labor costs of $230,000, and manufacturing overhead costs of $340,000. What is the total manufacturing cost incurred by the company? A. $720,000 B. $750,000 C. $705,000 D. $735,000arrow_forwardPLEASE HELP WITH THIS PROBLEM. ALL RED CELLS ARE EMPTY OR INCORRECT.arrow_forwardSuppose during 2023, BlueStar Shipping reported the following financial information (in millions): Net Sales: $40,000 Net Income: $150 Total Assets at Beginning of Year: $26,000 • Total Assets at End of Year: $24,800 Calculate the following: (a) Asset Turnover (b) Return on Assets (ROA) as a percentagearrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





