In the loan repayment schedule above, the loan amortizes over 10 years with even principal payments of $1,000. The individual in the situation above would need to make an annual total payment that consists of both principal and interest payments. The principal payment goes to reducing the outstanding principal amount due, while the interest …
At some point, the amount of accumulated retained earnings can exceed the amount of equity capital contributed by stockholders. Retained earnings are usually the largest component of stockholders’ equity for companies operating for many years. Owner’s equity is typically seen with sole proprietorships, but can also be known as …
For example, if your petty cash fund is $100, you may want to reimburse the fund when it drops below $15. While petty cash funds only take care of small expenses, these funds still need to be managed correctly. Keeping track of these petty cash expenses helps you to capture all your tax-deductible expenses. Most […]
Similar to the coupon rate and par value of bonds, corporations issue preferred stock with a dividend rate calculated as a percentage of the face value. A bond is essentially a written promise that the amount loaned to the issuer will be repaid. The par value is the amount of money that the issuer promises […]
Semi-variable overhead is a combination of fixed and variable overhead where some costs are incurred regardless of business activity but may also increase if business activity grows. For utilities, a base amount is charged and the remainder of the charges are based on usage. Organizing your overhead expenses into categories makes it …
In this case, the company may already be reporting operating income towards the bottom of the report. Operating income is a measurement that shows how much of a company’s revenue will eventually become profits considering its business operations. It’s a measurement of what money a company makes only looking at the strictly …