Are accounts payable an expense?

July 9, 2024 No Comments

A: Accounts payable is a liability, not an expense. The two represent related but ultimately different concepts. The balance of accounts payable is commonly included in total expenses when reviewing a company’s financial statements. The best way to understand how to distinguish between liabilities and

Are all fixed costs sunk costs?

July 9, 2024 No Comments

A: In accounting, finance and economics, all sunk costs are fixed costs. However, not all fixed costs are considered to be sunk. The defining characteristic of sunk costs is that they cannot be recovered. It’s easy to imagine a scenario where fixed costs are not

Are companies with a negative return on equity (ROE) always a bad investment?

July 9, 2024 No Comments

A: Companies that report losses are more difficult to value than those that report consistent profits. Any metric that uses net income is basically nullified as an input when a company reports negative profits. Return on equity (ROE) is one such metric. However, not all

Are qualified dividends included in ordinary dividends?

July 9, 2024 No Comments

A: Qualified dividends are included with ordinary dividends in box 1a of the Internal Revenue Service Form 1099-DIV; the box includes all ordinary dividends earned from a particular stock. Box 1b shows the number of the dividends in box 1a that are qualified dividends. The

Are small cap companies more risky investments than large cap companies?

July 9, 2024 No Comments

A: Small cap companies tend to be riskier than large cap companies. They have more growth potential, and offer better returns, especially over the long term But they do not have the resources of large cap companies, making them more vulnerable to negative events and

Can I have more than three original Bills of Lading?

July 9, 2024 No Comments

A: There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill. Three bills are standard – one for the shipper, one for the consignee, and one for the banker, broker

Do banks have working capital?

July 9, 2024 No Comments

A: The concept of working capital does not apply to banks since financial institutions do not have typical current assets and liabilities such as inventories and accounts payable. Also, it is very hard to determine current liabilities for banks, because banks typically rely on deposits

Do dividends go on the balance sheet?

July 9, 2024 No Comments

A: Cash dividends offer a typical way for companies to return capital to their shareholders. The cash dividend affects the cash and shareholders’ equity accounts primarily. There is no separate balance sheet account for dividends after they are paid. However, after the dividend declaration and

Do plane tickets get cheaper closer to the date of departure?

July 9, 2024 No Comments

A: The price of flights usually increases one month prior to the date of departure. Flights are usually cheapest between three and seven weeks prior to departure. This answer has some exceptions, notably the winter holidays. If the trip is planned during a holiday, the

Do production costs include all fixed and variable costs?

July 9, 2024 No Comments

A: In economics, production costs involve a number of costs that include both fixed and variable costs. Fixed costs are costs that do not change when output changes. Examples include insurance, rent, normal profit, setup costs and depreciation. Another name for fixed costs is overhead.

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