Questions from Financial Accounting

Q: Distinguish between simple and compound interest.

Distinguish between simple and compound interest.

Q: Distinguish between the discounted present value of a stream of future payments

Distinguish between the discounted present value of a stream of future payments and their net present value. If there is no distinction, then so state.

Q: The allowance method of accounting for uncollectible accounts receivable involves the creation

The allowance method of accounting for uncollectible accounts receivable involves the creation of a contra account that shows the estimated amount of uncollectible receivables. Why would financial sta...

Q: Inventory computations require cost-flow assumptions only because specific identification of

Inventory computations require cost-flow assumptions only because specific identification of items sold is costly. Specific identification is theoretically superior to any cost-flow assumption and eli...

Q: Does the present value of a given amount to be paid in

Does the present value of a given amount to be paid in 10 years increase or decrease if the interest rate increases? Suppose that the amount is due in 5 years? 20 years? Does the present value of an a...

Q: Rather than pay you $1,000 a month for the

Rather than pay you $1,000 a month for the next 20 years, the person who injured you in an automobile accident is willing to pay a single amount now to settle your claim for injuries. Would you rather...

Q: When the total amount of cash that a firm expects to collect

When the total amount of cash that a firm expects to collect from a customer is highly uncertain, the cost recovery method seems more appropriate than the installment method.” Explain.

Q: What are the characteristics of prepayments that qualify as assets? What

What are the characteristics of prepayments that qualify as assets? What is the accounting for prepayments?

Q: Firms may treat depreciation on equipment either as a product cost or

Firms may treat depreciation on equipment either as a product cost or as a period expense, depending on the type of equipment. Explain.

Q: The following data relate to sales made on account by Schneider Corporation

The following data relate to sales made on account by Schneider Corporation. The firm began operations in 2011. Schneider Corporation estimates that 2% of sales on account will ultimately become unc...