What does it mean when a company's "Interest Income" decreased by 35% from the previous year...

What does it mean when a company's "Interest Income" decreased by 35% from the previous year and "Note Payable" Increases to $12million from 0? What is the relationship?

and also how does this change impact risks of material misstatement in financial statements?

Expert Solution

When the company's interest income has decreased that means that the funds available with the company have been utilized for buying an asset or paying off an existing liability or withdrawal of capital.

There is also an increase in note payables from nil to 12 million which implies that the Company has bought a long term asset which has been paid with available funds in the company and also a liability has been created for the balance value of assets. The relationship between decrease in interest and increase in notes payable is linked with the availability of funds with the company. The value of available funds of the company has reduced as compared to previous year.

The reasons for such a change in the company as compared to the previous year could also be due to mis-statement of financial statements due to mis-appropriate of assets in the company. The company may identified such mis-statement of financial statements and recognized the impact of the same in the current year.

There may also be a possiblity that there is no mis-statement in the financial statement and the transactions which led to change in interest income and note payable were due to genuine business transaction during the year.

ekkarill92 answered 2 years ago

what does it mean when the offspring decreased?

What does it mean when cash flow from operations on a company's cash flow statement is...

What does it mean when cash flow from operations on a company's cash flow statement is negative? Is this bad news? Is it dangerous?

What does fresh start accounting mean? When it is utilized, how are a company's assets and...

What does fresh start accounting mean? When it is utilized, how are a company's assets and its liabilities reported? What do you know about statement of realization and liquidation? What is the difference between estate and trust? Is there a different treatment taxation wise? What do you know about probate law? What are its objectives? Who pays gift tax? If a person dies without leaving a valid will, how is the distribution of the property regulated?

What does it mean when a company's book value per share is less than the market...

What does it mean when a company's book value per share is less than the market value per share of a common stock? Should this be a key concern for an investor?

What does it mean if a company's debt-to-equity ratio shows a decrease from 1.06 to 1.59....

What does it mean if a company's debt-to-equity ratio shows a decrease from 1.06 to 1.59. And should shareholders be worried if this happens? Why? What can the company do to improve this situation. (write a paragraph)

An extract from the income statement of PoMA Ltd for the previous year is given below: &

An extract from the income statement of PoMA Ltd for the previous year is given below: Rs. Sales (50,000 units) 1,000,000 Direct materials 350,000 Direct labor cost (50,000 hours) 200,000 Fixed manufacturing overhead 190,000 Variable manufacturing overhead 50,000 Administration overheads 180,000 Selling and distribution overhead 120,000 The directors are keen to improve revenue and productivity and are considering various options. You are the management accountant and are requested to compute the following: ...

(URGENT) An extract from the income statement of PoMA Ltd for the previous year is given...

(URGENT) An extract from the income statement of PoMA Ltd for the previous year is given below: Rs. Sales (50,000 units) 1,000,000 Direct materials 350,000 Direct labor cost (50,000 hours) 200,000 Fixed manufacturing overhead 240,000 Variable manufacturing overhead 50,000 Administration overheads 180,000 Selling and distribution overhead 120,000 The directors are keen to improve revenue and productivity and are considering various options. You are the management accountant and are requested to compute the following: ...

URGENT An extract from the income statement of PoMA Ltd for the previous year is given...

URGENT An extract from the income statement of PoMA Ltd for the previous year is given below: Rs. Sales (50,000 units) 1,000,000 Direct materials 350,000 Direct labor cost (50,000 hours) 200,000 Fixed manufacturing overhead 210,000 Variable manufacturing overhead 50,000 Administration overheads 180,000 Selling and distribution overhead 120,000 The directors are keen to improve revenue and productivity and are considering various options. You are the management accountant and are requested to compute the...

In java, what does it mean when a variable "exists" from its declaration to }?

Suppose the mean income of 35-year -olds in the United States is $25,000. A random sample...

Suppose the mean income of 35-year -olds in the United States is $25,000. A random sample of 150 35-year-olds in California results in a sample mean income of $26,600 and a sample standard deviation of $3800. At the 1% significance level, can we conclude that the true mean income of 35-year-old Californians is greater than that of the nation, in general?

Question