Accounting opinion about cash discounts and

Learning Objectives for this Course: After completing this course, students will be able to:

Accounting opinion about cash discounts and

The premium account acts as an addition to the investment account on the balance sheet, while the discount account acts as a minus a contra.

Thus, in the previous example, the balance sheet after the first year would appear as follows: This increase should be debited to the Interest Revenue account since, in effect, it causes a decrease in the interest earned.

The bond pays interest annually on December This journal entry is: If the bond investment is sold before it reaches maturity, the investment account and its related premium or discount should be closed.

If the selling price is greater than the book value of the bond, a gain should be recognized. Otherwise, a loss should be recognized. The journal entry is: Equity Securities Long-term investments in equity securities involve the purchase of stock to be held on a long-term basis.

This is discussed in detail in Advanced Accounting. There are two methods of accounting for these investments.

Difference between Trade discount And Cash discount | Capital Budgeting Techniques

Otherwise, the cost method is more appropriate. Furthermore, dividends received from the subsidiary are not considered to be income but withdrawals, and therefore the investment account must be reduced.

Under the cost method, the parent does not earn income when the subsidiary earns income, and dividends received are treated as revenue rather than withdrawals.

Accounting opinion about cash discounts and

If we assume that Parent has no significant influence and, therefore, the cost method is appropriate, the journal entries for these transactions would be:Recording Cash Discounts The generally accepted method for handling cash discounts on a credit sale is to record and track the discount in a separate sales discount account.

Because you have no way of knowing whether the customer will take advantage of the cash discount at the time of the sale, debit accounts receivable for the total amount. “You are entitled to your opinion. But you are not entitled to your own facts” – Daniel Patrick Moynihan.

Opinions aren’t facts — they can be based on fact or knowledge, but can also rely heavily on emotions, preconceived thoughts or belief systems. Sep 06,  · Board of Governors of the Federal Reserve System.

The Federal Reserve, the central bank of the United States, provides the nation with a safe, .

Gross Method of Accounting for Cash Discounts | Your Business

Financial Reporting Considerations Related to Pension and Other Postretirement Benefits This publication highlights some of the more important accounting.

APB Opinion No. 20, Accounting Changes APB Opinion No. 22, Disclosure of Accounting Policies a limited or a continuous basis to a customer may take various forms including discounts, coupons, rebates, and “free” products or services.

Issue contemplates that vendor amount of cash consideration that (a). Course - Nonprofit Accounting (3 credits) Two essential issues are covered - the mechanics of non-profit accounting and the necessity of financial accountability. The outcome of this course is the development of an accounting policy manual for a nonprofit organization.

Substantive Testing: Cash, Receivables, Inventory And Fixed Assets | Accounting, Financial, Tax