Week 3 - Chapter 17 Question 1 What is the time value of...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 17 Question 1: What is the time value of money? Why should accountants have an understanding of compound interest, annuities, and present value concepts? Money on hand at the present time is worth more than the same amount in the future because of its potential earning capacity. The time value of money is the value of money figuring in a given amount of interest earned over a given amount of time. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. http://www.investopedia.com/terms/t/timevalueofmoney.asp Accountants should have an understanding that way they can determine a company’s income or how much they have to pay out Question 26: What are the main distinctions between a traditional financial instrument and a derivative financial instrument? Temporary versus Permanent differences. Many items create differences between accounting profit and taxable income. These differences can be divided into two types. Permanent differences do not cause deferred tax liabilities or assets. They occur if a revenue or expense item: is recognized for tax reporting but never for financial reporting; or is recognized for financial reporting but never for tax reporting. Permanent differences result from revenues and expenses that are reportable on either tax returns or in financial statements but not both. Permanent differences
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern