Does a capital expenditure (CAPEX) immediately affect income statements?

July 9, 2024 No Comments

A: A capital expenditure, or CAPEX, is considered an investment into the business. The money spent is not immediately reported on the income statement; rather, it is treated as an asset on the balance sheet. A CAPEX is deducted over the course of several years

Does the balance sheet always balance?

June 30, 2024 No Comments

A: Yes, a balance sheet should always balance. The name “balance sheet” is based on the fact that assets will equal liabilities and shareholer’s equity every time. The assets on the balance sheet consist of what a company owns or will receive in the future and

Does the balance sheet always balance?

July 7, 2024 No Comments

Does U.S. GAAP prefer FIFO or LIFO accounting?

June 30, 2024 No Comments

A: Unlike the inventory reporting rules under the International Financial Reporting Standards, or IFRS, the generally accepted accounting principles, or GAAP, do not require companies to use the first-in first-out, or FIFO, method exclusively. American companies are allowed to decide between FIFO or last-in first-out,

Does U.S. GAAP prefer FIFO or LIFO accounting?

July 7, 2024 No Comments

Does U.S. GAAP prefer FIFO or LIFO accounting?

July 9, 2024 No Comments

Does unearned revenue affect working capital?

July 9, 2024 No Comments

A: Unearned revenue, or deferred revenue, typically represents a company’s current liability and affects its working capital by decreasing it. Unearned revenue is recorded when a firm receives a cash advance from its customer in exchange for products and services that are to be provided

Does working capital include inventory?

July 9, 2024 No Comments

A: A company’s working capital includes inventory, and increases in inventory make working capital increase. Working capital is calculated as the difference between a company’s current assets and current liabilities. Inventory is classified as part of the current assets since there is an expectation that

Does working capital include salaries?

July 9, 2024 No Comments

A: A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, so they count towards the calculation of the company’s working capital. However, the company would not record paid salaries as current liabilities, so they

Have hedge funds eroded market opportunities?

July 9, 2024 No Comments

A: Hedge funds have not eroded market opportunities for longer-term investors. Many investors incorrectly assume they cannot compete with hedge funds in the marketplace and that the odds are stacked against them. There are some strategies such as high-frequency trading that investors cannot compete with;

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