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1 year ago

Which are 3 common misconceptions users of an income statement may have?

1 answer:

3 0

The three most frequent misconceptions are that net income equals cash, net income excludes estimates, and net income reports all changes in value that occurred during the accounting period.

One of the three crucial financial statements used to describe a company's financial performance throughout a certain accounting period is the income statement. The balance sheet and the cash flow statement are the other two important statements. The income statement, which is often referred to as the profit and loss (P&L) statement or the statement of revenue and expense, primarily focuses on the company's revenue and expenses over a specific time period. Understanding how to study an income statement is the greatest approach to evaluate a business and choose whether or not to invest.

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You might be interested in

A bank has on-balance-sheet assets with a book value of $940 million and a market value of $985 million and on-balance-sheet lia

horsena [70]

Answer:

$45 million

Explanation:

Data provided in the question:

Book value of assets = $940 million

Market value of assets = $985 million

Book value of liabilities = $900 million

Market value of liabilities = $930 million

off-balance-sheet assets = $150 million

Off-balance-sheet liabilities = $160 million

Now,

Stockholders Net worth

= Market value of assets + Off balance sheet assets - Market value of liabilities - Off balance sheet liabilities

= $985 million + $150 million - $930 million - $160 million

= $45 million

8 0

3 years ago

A major difference between financial statement auditors and fraud examiners is that most financial statement auditors: a. match

Oksi-84 [34.3K]

Answer: Option A

Explanation: An auditor refers to an individual who is certified by an authority to perform an audit. The auditor provides an independent opinion as if the statements of the company are prepared as per the accounting and auditing standards.

Fraud examiners are the individuals who investigates an activity which is concluded to be a fraud already.

The difference between the two is, the auditor initially ascertains if there is a fraud while the fraud examiner tries to ascertain who is guilty of performing the fraud.

Hence from the above we can conclude that the correct option is A.

7 0

2 years ago

At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000

erik [133]

I would say alot of money

7 0

2 years ago

Hailey Corporation pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years an

Sloan [31]

Answer:

$64.76

Explanation:

The current share price can be determined by calculating the present value of the dividend

Present value is the sum of discounted cash flows

Present value can be calculated using a financial calculator

Cash flow from year 1 to 13 = 9.45

I = 10.7

PV = 64.76

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

5 0

3 years ago

In reviewing the agreement between AdCreate and Anchor Motors, Jacob Stein found that sales ofAnchor rose 2.8% compared to the p

kakasveta [241]

Answer:

AdCreate billed Anchor Motors $529,412 for the third quarter in 2010

Explanation:

The advertizing company usually takes a 15% commision

Which means from the total amount billed to customer 15% ar commision which means:

money paid to media + 15% comission of the billed amount= total amount billed

450,000 + 0.15X = X

Now, we try to solve for X and get the amount billed to anchor motors.

X = 450,000/.85 =<em> 529.411,76</em>

8 0

3 years ago