Concept explainers
Videos
1.
Introduction:
Cash flow:
The movement of cash into and out of a business enterprise or company at a specific time refers to the cash flow.
The item(s) in the income statement that will not affect
2.
Introduction:
The movement of cash amount that comes into a business enterprise refers to the cash inflow.
The project's annual net cash inflows.
3.
Introduction:
Net cash inflow:
The movement of cash amount that comes into a business enterprise refers to the cash inflow and net cash inflow of a company involving sales and variable costs.
The present value of the project's annual net cash inflows.
4.
Introduction:
For a specific project, by comparing initial investment, the present value of cash flows in a particular time at a particular
The project's net present value.
5.
Introduction:
Profitability Index:
The attractiveness or profitability of investment in the project can be measured by the profitability index by ranking projects.
The project profitability index for this project.
6.
Introduction:
Internal Rate of Return (IRR) is a rate of interest that is helpful to compare investments of the project with one another and makes the net present value of all cash flows equal to zero.
The project's internal rate of return nearest whole percent.
7.
Introduction:
Payback period:
The payback period indicates the number of years that are required to recover the original/actual or real investment of the project.
The project's payback period.
8.
Introduction:
The simple rate of return:
The simple rate of return considers the annual increase in net operating income by reducing or subtracting the depreciation on the investment.
The project's simple rate of return for each of the 5 years.
9.
Introduction:
Net present value:
For a specific project, by comparing initial investment, the present value of cash flows in a particular time at a particular rate of return is the net present value.
Whether the project's net present value is to be higher/lower/the same if the company's discount rate was 16% instead of 14%.
10.
Introduction:
Payback period:
The payback period indicates the number of years that are required to recover the original/actual or real investment of the project.
Whether the project's payback period is higher/lower/the same as before if the equipment used had a salvage value of 300k at the end of 5 years.
11.
Introduction:
Net present value:
For a specific project, by comparing initial investment, the present value of cash flows in a particular time at a particular rate of return is the net present value.
Whether the project's net present value is higher/lower/the same as before If the equipment had a salvage value of 300k at the end of 5 years.
12.
Introduction:
Internal Rate of Return:
Internal Rate of Return (IRR) is a rate of interest that is helpful to compare investments of the project with one another and makes the net present value of all cash flows equal to zero.
Whether the project's simple rate of return is higher/lower/the same if the equipment had a salvage value of 300k at the end of 5 years.
13.
Introduction:
Net present value:
For a specific project, by comparing initial investment, the present value of cash flows in a particular time at a particular rate of return is the net present value.
The project's actual net present value if all estimates (including total sales) were exactly correct except for the variable expense ratio, which was actually 45%.
14.
Introduction:
The payback period:
The payback period indicates the number of years that are required to recover the original/actual or real investment of the project.
The project's actual payback period if all estimates (including total sales) were exactly correct except for the variable expense ratio, which was actually 45%.
15.
Introduction:
Simple rate of return:
The simple rate of return considers the annual increase in net operating income by reducing or subtracting the depreciation on the investment.
The project's actual simple rate of return if all estimates (including total sales) were exactly correct except for the variable expense ratio, which was actually 45%.
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Chapter 7 Solutions
Loose Leaf For Managerial Accounting for Managers
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- Whispering Winds Corp.'s trial balance at the end of its first month of operations reported the following accounts and amounts with normal balances: Cash $14720 Prepaid insurance 460 Accounts receivable 2300 Accounts payable 1840 Notes payable 2760 Common stock 4600 Dividends 460 Revenues 20240 Expenses 11500 Total credits on Whispering Winds Corp's trial balance are A. $28980. B. $30360. C. $29900. D. $29440arrow_forwardSwifty Corporation's trial balance reported the following normal balances at the end of its first year: Cash $14440 Prepaid insurance 530 Accounts receivable 2660 Accounts payable 2130 Notes payable 3190 Common stock 4100 Dividends 530 Revenues 22040 Expenses 13300 What amount did Swifty Corporation's trial balance show as total credits? A. $31460 B. $32520 C. $30930 D. $31990arrow_forwardMonty Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement for Monty as at May 31, 2020, are as The following is additional information about transactions during the year ended May 31, 2020 for Monty Inc., which follows IFRS. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement its cash, Monty issued 4,000 additional common shares. Cash dividends of $35,000 were declered and paid at the end of the fiscal year. create direct method cash flow statement, show your workarrow_forward
- Following is additional information about transactiona during the year ended May 31, 2020 for Monty Inc., which follows IFRS. Plant assets costing $69,000 were purchased by paying $47,000 in cash and issuing 5,000 common shares. In order to supplement iRs cash, Monty Issued 4,000 additional common shares. Cash dividends of $35,000 were declared and paid at the end of the fiscal year. PRepare a direct Method Cash FLow using the format.arrow_forwardmake a trail balancearrow_forwardOn July 31, 2025, the general ledger of Cullumber Legal Services Inc. showed the following balances: Cash $4,960, Accounts Receivable $1,860, Supplies $620, Equipment $6,200, Accounts Payable $5,080, Common Stock $4,340, and Retained Earnings $4,220. During August, the following transactions occurred. Aug. 3 5 Collected $1,490 of accounts receivable due from customers. Received $1,610 cash for issuing common stock to new investors. 6 Paid $3,350 cash on accounts payable. 7 Performed legal services of $8,060, of which $3,720 was collected in cash and the remainder was due on account. 2 2 2 2 2 12 Purchased additional equipment for $1,490, paying $500 in cash and the balance on account. 14 Paid salaries $4,340, rent $1,120, and advertising expenses $340 for the month of August. 18 20 24 26 27 Collected the balance for the services performed on August 7. Paid cash dividend of $620 to stockholders. Billed a client $1,240 for legal services performed. Received $2,480 from Laurentian Bank;…arrow_forward
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