Question 3: Depreciation is considered as accounting policy and operational expense for the accounting period. The...

Question 3:
Depreciation is considered as accounting policy and operational expense for the accounting period.
The value to be included in the financial statement is calculated based on the decision of the Board.
(a) You are required to:
(i) Explain the difference between capital expenditure and revenue expenditure, and how
each type of expenditure will affect the financial statements of a business.
(ii) Explain why it is important to distinguish between capital expenditure and revenue
expenditure, and briefly explain the accounting treatment of each type of expenditure.

(iii) Under what circumstances will you consider the reducing balance method as the most
appropriate method in calculating depreciation?
(b) Does depreciation decrease cash in a business? Explain your answer.

Expert Solution

ekkarill92 answered 1 year ago

Depreciation is considered as accounting policy and operational expense for the accounting period. The value to...

Depreciation is considered as accounting policy and operational expense for the accounting period. The value to be included in the financial statement is calculated based on the decision of the Board. (a) You are required to: Explain the difference between capital expenditure and revenue expenditure, and how each type of expenditure will affect the financial statements of a business. ( Explain why it is important to distinguish between capital expenditure and revenue expenditure, and briefly explain the accounting treatment of...

Depreciation is considered as accounting policy and operational expenses for the accounting period. the value to...

Depreciation is considered as accounting policy and operational expenses for the accounting period. the value to be included in the financial statement is calculated based on the decision of the board. a) you are required to: (i) Explain the difference between capital expenditure and revenue expenditure, and how each type of expenditure will affect the financial statements of a business. ii) Explain why it is important to distinguish between capital expenditure and revenue expenditure and briefly explain the accounting treatment...

1. Joe purchased a piece of equipment considered §1245 property for $5,500. Depreciation expense of $3,000...

1. Joe purchased a piece of equipment considered §1245 property for $5,500. Depreciation expense of $3,000 has been taken. Assume the equipment was held for more than one year. For each situation below, indicate: a) the amount of gain/loss and b) how the gain/loss is treated from a tax standpoint. Situation 1: Sold for $7,000 Situation 2: Sold for $3,000 Situation 3: Sold for $2,000 2. A taxpayer received a parcel of land as a gift. At the time of...

What accounting policy spotify uses for inventory, depreciation, and investments?

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT:...

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT: Intresrest Expense: Pre-tax Income: Taxes: Net Income: Dividened: Paid to Retained Earning: 1. Earn $85,000 in sales revenue: $40,000 into Accounts Receivable and $45,000 in cash. 2. The sales require $50,000 worth of existing inventory. $20,000 of additional inventory is purchased on credit and applied to the Accounts Payable. 3. $30,000 is collected from Accounts Recievable. 4. $35,000 of the Accounts Payable is due...

Why is depreciation considered a non-cash expense? Provide some examples of non-cash expenses and explain if...

Why is depreciation considered a non-cash expense? Provide some examples of non-cash expenses and explain if should be considered when making decisions for purchasing capital assets. Why or why not.

Question #3: H&M, Inc. reported the following data: Net income $200,000 Depreciation expense 25,000 Loss on...

Question #3: H&M, Inc. reported the following data: Net income $200,000 Depreciation expense 25,000 Loss on disposal of equipment 30,000 Increase in accounts receivable 20,000 Decrease in accounts payable (8,000) Requirement: Prepare the cash flows for operating activities under the indirect method as it would appear on the statement of cash flows. Question #4: Explain the difference between static and flexible budgets. Provide a detailed example of how companies can use flexible budgets for decision making.

The following information is available from the current period financial statements: Net income $165,000 Depreciation expense...

The following information is available from the current period financial statements: Net income $165,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flow from operating activities using the indirect method is $188,000 $198,000 $156,000 $230,000

The following information is available from the current period financial statements: Net income $131,943 Depreciation expense...

The following information is available from the current period financial statements: Net income $131,943 Depreciation expense 21,983 Increase in accounts receivable 14,002 Decrease in accounts payable 21,679 The net cash flow from operating activities using the indirect method is

(3) Provide an operational definition of the concept of “cloud accounting” and develop (10) questions that...

(3) Provide an operational definition of the concept of “cloud accounting” and develop (10) questions that would measure cloud accounting by using Lickert scale. (4) Identify the relevant p

Question