B. CAPITAL BUDGETING Situation: Assume that you are planning to invest for the expansion of your business. You consider the two projects: large expansion which costs PHP 1,100,000 and medium expansion which costs PHP500,000. The discount rate is 8% annually. You are task to do the following. Also, you interpret your result (for problem solving). 1. Clate the NPV for Large E on 2. Calcula 3. Calculate the l 4. Calculate the 5. Calculae Profitability Inde arge Expansion 6. Cate the Profitability Index for 7.culate the Payback period for Large sion 8. Calculate the Payback period for Medium Exsion 9. Create an Evaluation Summary indicating the NPV, IRR, PI, and Payback period of all options. Please see the PDF lecture notes or lecture video for the guide. 10. Based on the NPV, IRR, PI, and Payback period of each project option, what is the best option for the expansion of your business? Discuss your answer. Expansion ge Expansion Expansion RV for M or M m Expansion Project A Large Expansion PHP 1,100,000 Project B Medium Expansion PHP 500,000 Particulars Initial Investment Outlay Cash Inflows Year 1 PHP 250,000 PHP 300,000 PHP 350,000 PHP 400,000 PHP 100,000 PHP 120,000 PHP 150,000 Year 2 Year 3 Year 4 PHP 170, 000
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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