...XACC-291-Week 2- Reflection Rukaiyah Williams XACC-291 06/28/15 Professor Jana Rideout XACC-291-Week 2- Reflection Small and larger companies daily incur revenue expenditures to upkeep their operating efficiency and productive life of an asset. Expenditures are unavoidable as well as they are very necessary to expand the business. Expenditures are payments of cash or cash equivalent for goods or services. The difference between revenue and capital expenditures is that revenue expenditures are expenses that are immediately charged against revenue as expenses. Regular and periodic repairs are revenue expenditures because they are charged directly to specific accounts. Examples of these accounts would be Repairs and Maintenance Expense. Capital expenditures are expenditures will increase the company’s investment primarily in productive facility. A capital expenditure is an amount spent to attain or improve a long term asset such as buildings or equipment. When recording capital expenditure, it is usually recorded in accounts classified or titled as Property, Plant and Equipment. Generally, because capital expenditures provide income for the company over a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred. Revenue expenses typically are shorter term expenses because they always required to meet the ongoing operational costs of running a business. (Investopedia, 2015) The contrasting factor of capital and...
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...Revenue Expenditures & Capital Expenditures Tracey DeSautel November 1, 2014 University of Phoenix XACC/291 In the world of accounting, there are numerous types of expenses that come along with running a business on a day to day basis as well as overall. There are things that break down and add value to the companies assets as well as things that are expensed to run the business on a daily basis. These can break down to two important items and those are Revenue expenditures and Capital Expenditures. Revenue expenditures is the amount that is expensed immediately. Thereby being matched with revenues of the current accounting period. Examples include things such as routine repairs because they are charged to a direct account such as “ repairs and maintenances expenses> these do not extend the life or improve the assets for the company. Capital expenditures are amounts spent to acquire or improve a long term asset. These can be things such as buildings or even equipment. These are usually recorded in accounts classified as “ property, plants and equipment”. These are charged to depreciation expense over the assets lifespan. It breaks down to capital expenditures are for items such as machinery and buildings where as revenue expenditures are for things that create revenue such as advertising and labor. A further look into capital expenditures and examples are that, that do not occur in daily transactions for the company and include such purchases that may include the...
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...and Indirect Cash Flows Dana Benton XACC 291/C - Principles of Accounting II April 9, 2014 Elizabeth Mullaney Check Point: Direct and Indirect Cash Flows According to our text, the statement of cash flows reports, cash receipts, cash payments, and net change in cash, due to operating, investing, and financing activities during a set period. The four main reasons this report is helpful to investors, creditors, and others to look at, are simple. The report is helpful to look at the company's ability to produce future cash flow, to pay dividends, for the difference between net income and net cash used by operating activities, and cash investing, and financing transactions during a particular time. (Weygandt, Kimmel, & Kieso, 2010) Most companies use the indirect method. The method adjusts net income for items that do not affect cash. This process is easier and costs less to prepare. The process highlights the difference between net income and net cash flow for the operating activities. The direct method shows operating cash receipts and payments. The direct method results in a better understood report. The drawback of the direct method is it requires more information, and most companies see this as extra work, when to outcome is the same. The Financial Accounting Standards Board is a seven member board. The board consists of accounting professionals, which establish and coordinate the standards of accounting and accounting reporting, in the United States. The standards...
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...Capital Expenditures & Revenue Expenditures Veronica rowe XACC/291 Jan 29, 2014 Shontell Chrisman Capital Expenditures & Revenue Expenditures Capital expenditures; a sum spent to procure or development of a long term asset, such as buildings or equipment. Under normal accounting methods the cost is put under equipment, plant, property. Everything except the cost of land can be charged as depreciation expenditure over the useful life of the asset. Capital expenditures are put on financial report as an asset on balance sheet. Capital expenditure rewards are spread over several accounting periods. Capital expenditures can include replacement cost to delivery cost, legal charges and everything in between. Revenue expenditures; are amounts distributed out instantaneously, they match entries of the existing accounting period. Scheduled maintenance is a revenue expense, because they are charged without waiting to an account like maintenance and repairs expenditures. Major repairs do not affect the life of the asset. Revenue expenditures are put on financial report on the income statement. Revenue expenditures may include maintenance charge, repair, and renewal and everything in between. Both are classified as assets. The difference between the source of Capital and Revenue expenditures is special, because Capital is comprised of cost related to fixed assets, and Revenue expenditures affect is temporary, they come often and contains no physical presence, and does not...
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...Liabilities Tasha Gilbert XACC/291 Melody Lott March 7, 2014 First to differentiate between and understand valuation, depreciation, amortization and depletion have to define each term. Valuation refers to the value of something; in accounting valuation is the fair market value and net depreciation. Items that are valued in accounting are usually a financial asset or a liability. An objective technique of calculating the value of company is to calculate its value based on future earnings. A subjective technique of valuation would be to judge the contributions of a company’s management. Depreciation is the adjustment to the net income of an item to the diminished value of fixed assets. Amortization is an adjustment to the net income of an aging entity to figure how to estimate the intangible assets cost over the estimated useful life of the asset. Depletion is a concept that is used more often than not in mining, timber, or petroleum. Depletion describes a company’s physical depletion of natural resources. Amortization and depreciation deal with the aging of assets where depletion deals with the actual depleting of resources. Valuation to some up is putting a value on assets whether aged or new. It Is acceptable for companies to use two methods of depreciation. Often times a company will use the straight line depreciation method as well as accelerated method on other items. A company can will use straight line method for a number...
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...Jamie Shuster XACC 291 July 19, 2015 Carmela Hicks Reflection During the normal operation of a business there will always be cost incurred for running an organization. During the useful life of a plant asset, a company may incur costs for ordinary repairs, additions, or improvements (Stormo, 2009 p 409). Every day we have ordinary repairs and then we have additions and improvements. Costs incurred for ordinary repairs are considered as revenue expenditures. Ordinary repairs are expenditures that are used to maintain the operating efficiency and productive life of the unit costs acquired for additions and improvements are considered capital expenditures. Companies require revenue expenditures to maintain the operating efficiency and productive life of an asset. Usually these small costs occur frequently. Examples of revenue expenditures are, oil changes and tune-ups, maintenance charges, repairs costs, renewal expenses, and repainting costs. Companies record the entry of revenue expenditures as a debit to Repair or Maintenance Expense as they are obtained, and a credit to cash or accounts payable (Stormo, 2009). Companies acquire capital expenditures to increase the operating efficiency, productive capacity, or useful life of an asset. Usually these rather big costs occur infrequently. Capital expenditure is money is being spent on assets that will increase the company’s ability to pull in profit or operate at a higher work level (Accounting-Simplified, 2013)...
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...XACC/291 - PRINCIPLES OF ACCOUNTING II Instructor: RICHARD CARMODY Jody Choate 12/15/12 Preferred Stocks meaning A corporation can issue two types of stock: common and preferred. Common stock is partial ownership in a company and these are the shares usually referred to when discussing a company's stock. Preferred stock pays higher dividends and offers investors different opportunities for income investing. Investors should look at common and preferred stocks in very different ways. Companies issue preferred shares as a way to raise capital instead of borrowing money by issuing bonds. Most preferred shares are issued with a fixed dividend rate that the company must pay before paying any dividend to common shareholders. The majority of preferred stock issues do not have an expiration date, so the issuing company is not required to pay back the money raised as it would if it issued bonds. Preferred shares can be issued with different features that make them more attractive to investors. Cumulative preferred shares are entitled to make up any missed dividend payments before dividends are paid on common shares. Adjustable preferred shares have their dividends changed in line with some market interest rate. This protects shareholders in a rising rate environment. Convertible preferred shares could be exchanged for common shares at a pre-determined ratio Investors buy preferred shares primarily an income investment to receive the regular dividends. Although preferred...
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...Recognizing Differences Johnny T Russell XACC/291 Paula Hill 06/22/2014 Abstract There are differences between depreciation, valuation, amortization, and depletion. This short essay will show how they different from each other and whether it is ok to calculate depreciation by using two different methods. Depreciation, depletion, and amortization may have a different way of being presented. Each one is are accounting terms and are listed within the Generally Accepted Accounting Principles (GAAP). Each one is used to distribute the past cost of a particular asset. These allocations are especially helpful when checking the life of the asset. They compare the expenses and the wear and tear of the equipment while in production, or daily operations and or in administrative duties. When measuring these three you also have to take into consideration past cost, salvage value if any, and what is the useful life estimated to be? First is depreciation, this is when you allocate any tangibles that the asset has in the past. You take the past cost and you subtract the normal remaining or what the salvage value could be over its lifetime. You can use the easiest method which is the straight line method. Even though this method comes with a lot of criticism because it says that this method of time than the life or usage of the equipment. You can however use the accelerated method. This method gives you a broader range of how to deal with depreciations. Next...
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...Direct and Indirect Cash Flows Rochelle Hicks XACC/291 Rashad Abdullah The cash flow statement provides information for managers and investors of how well a business is managing its cash that is coming in and going out. Businesses need liquid assets to pay bill and buy inventory. If assets are not readily available, bills cannot get paid and new inventory cannot be purchased (Petryni, 2016). The direct method and indirect method of cash flows are different due to the cash flows from operating activities, the first portion of the statement of cash flows. There is no difference in the cash flows in the investing and financing activities portion of the statement of cash flows. The cash flows from operating activities include cash from customers and cash paid to suppliers using the direct method. Net income, followed by adjustments needed to convert the total net income to the cash amount from operating activities is reported using the indirect method. A reconciliation of net income to the cash provided by operating activities is reported under the direct method but under the indirect method it is done automatically. For the most part corporations, us the indirect method of cash flows (Averkamp, 2016). The Financial Accounting Standards Board recommends the direct method of cash flows but allows corporations to use the direct and indirect method of cash flows because they both report net cash flow from operating activities. A statement of cash flows is a requirement as part...
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...Stocks Heather Anderson 11/17/2014 XACC/291 Celena Hudak Preferred Stocks Preferred stock is a type of stock issued by a business that usually pays a fixed dividend prior to any distributions to the holders of the common stock of the business. (Tools, 2014) Preferred stock has voting rights. Preferred stock dividends may be stated as a fixed amount (such as $5) or as a percentage of the stated price of the preferred stock. For example, a 10% dividend on $80 preferred stock is an $8 dividend. (Tools, 2014) There are many features in preferred stock that to have investors want to buy or making it easier for a company to buy back the stock. A company can have callable. This gives the company the ability to buy the stock back at a specific date and predetermine price. Convertibility gives investors the option to convert their preferred stock into a pre-determined number of shares of the company's common stock at some point in the future. Cumulative feature forces the company to pay the full amount of dividends not paid before they can common stockholders. Participative this feature can really cut into the common stockholders and many companies’ only uses this if there is no other means of raising capital. All of the features listed above are attractive to investors except for callable. Preferred stock is offset by the callability, interest-rate and other risk factors that come along for the ride. And while some investors might be perfectly willing to take on these risks...
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...Recognizing Differences N. Jackson XACC/291 May 14, 2014 Christopher Severson Recognizing Differences Accounting requires that the most accurate numbers be recorded as they relate to specific assets and liability accounts. In order to ensure that those items have been properly identified and aligned with the proper costs, various processes are used based on the type of item that needs to be recorded. Four processes that are utilized to record the costs associated with plant assets, natural resources and intangible assets include valuation, depreciation, amortization and depletion. The process of valuation is different from depreciation, amortization and depletion in that it involves of making an estimation of an asset based in the market value. This means that the market value at the time of estimation, will determine what the worth is of an asset. Depreciation is the method utilized when allocating the costs of plant assets. During this process, the costs of plant assets are reduced during the service life of that asset. When utilizing depreciation, there are three different calculation methods that can used. Those three methods are the straight-line method, units-of –activity and the declining-balance method. Even though any of the methods can be used to determine depreciation, only one should be used at a time. Using more than one method at the same time is not recommended as...
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...Recognizing Differences Checkpoint Veronica Course: XACC 291 July 10, 2013 What are the different types of dividends corporations may issue? When should a corporation pay dividends? Do you prefer a stock a cash dividend or dividend? Why First I would like to start by explaining the four dividends and those are cash, stock, property and scrip. Cash dividends are often paid for per share of stock with in the company. A stock dividend is often offered to shareholders, which they don’t need to pay taxes until they are sold. Property dividends are offered to shareholders when companies are having financial difficulties. Scrip is almost the same except that they issue scrip instead of paying money to their shareholders. Personally if I ever had to choose between any of the four types of dividends it would be the stock it is one of the best options to choose from granted if the company happens to go belly-up so will you. However if the stocks should significantly rise and prosper so will you. This is the chance you take when you invest in any company. The one thing you should do before you invest in any company is research it. Making sure your money is in the right place is probably the smartest thing you can do. If the company is in financial ruin, you are more likely to go down with it. Assuming you did your homework right, you are going to run into some red flags that means there is something terribly wrong with the way the financial paper work is being handled...
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...Cash Flow Statements Mindy Blankemeyer XACC/291 March 1, 2015 Tameka Johnson Cash Flow Statements Cash flow statements, which are also referred to as statement of cash flow, are a part of a company’s essential worksheets which demonstrate how a company has performed over a specific amount of time. Companies are required to prepare a cash flow statement because it will list all of the information the owners and investors will need to make important decisions about the company. The statement will provide the incoming cash, the outgoing cash, and the amount of cash on hand for expansion and growth. A cash flow statement is divided into three sections. Cash flow from operations, financing and investing. Within these three sections of a cash flow statement, the cash from operations and financing will show how and where the company is receiving its money from, and the investing section will show where the company spends its money. In a closer look at these three sections, under the operations column, listed will be the income the company has earned from sale of goods, or monies received from services offered. Also in this section will be some expenses such as insurance and accounts payable. Under the investment section of a cash flow statement will be a column which is dedicated to the investments the company is making. If the company purchases or sells property, buildings, or new equipment, it will be listed in this section. In the final financing section of a cash...
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...1 Recognizing Differences Tonya Johnson XACC/291 April 23, 2015 Melody Lott 2 Recognizing Differences Valuation is the process of determining the value or worth of an asset, intangible or tangible, and whether it will need to be amortized, depreciated, or depleted. Each is used for different types of assets and relates directly to the allocating of costs rationally and systematically for any business. “Depreciation is the process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner” (Weygandt, Kimmel, & Kieso, 2010, p.402). Depreciation refers more to a tangible asset that over time loses some of its value due to normal wear and tear such as buildings or equipment. Some people tend to confuse this cost with the actual book cost of an asset. For instance, a truck that has been completely depreciated, may still sale for $20,000. A business's intangible expenses are amortized. This allows a company to allocate an expense over the assets useful life rather than recording the entire entry in one accounting period. Examples of intangible assets include patents, copyrights, trademarks and trade names, franchises and licenses, and goodwill. Goodwill is considered to have an indefinite life and is acutally not amortized. “The allocation of the cost of natural resources to expense in a rational and systematic manner over the resource's useful life is called depletion” (Weygandt, Kimmel, & Kieso...
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...Clive Williams Capstone Question XACC/291 September, 11th 2014 Shontell Chrisman There are many different elements that involved with operating a successful business. The world of “moving money” or financing is derived of a host of complex mathematics, but with one simple goal in mind, “Profits.” One of the most dangerous, but commonly known viruses to the banking world is the fraud. In chapter 7 of “Financial Accounting” describes fraud as a dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. Fraud is not only up to the employees it is also an act committed by consumers as well. In the past as well as recent years, fraud is largely affected when it is committed by an employee. When an employee commits such a heinous crime it affects the company as a whole. The company is offering the employee great competitive pay, some of the best benefits packages, and most financial institutions have so many consumers personal information at the tip of their finger tips. I mean, who wants to give their money to a company that can not only taker their money, but steal their entire identity. Trust is a major issue when dealing in the financial transactions industry whether it be that the retail or corporate levels. The government had to step in and put a stop to businesses that are careless and reckless about handling funds. It seems to be a tough job on all parties at hand, but the...
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