How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask RD Your Own Question

RD
RD, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 8784
Experience:  MBA, CPA
510454
Type Your Finance Question Here...
RD is online now
A new question is answered every 9 seconds

1. Your friend tells says, I just got out of an accounting ...

Resolved Question:

1. Your friend tells says, “I just got out of an accounting lecture about future value and present value. Frankly, I don't have a clue what the professor was talking about, and we have a quiz on Wednesday. Help!” What would you tell your friend? How would you help him/her out? Clearly and concisely explain what is meant by the time value of money and what the terms future value and present value represent.
2. Your uncle offers you a choice of $20,000 in 50 years or $45 today. If money is discounted at 13%, which offer should you choose? Explain.
3. You and Frank are studying for an upcoming accounting exam. Frank says, “Contributed capital is basically the stockholders' equity of the company. It includes things like the common stock, paid-in capital in excess of par, preferred stock, and retained earnings.” Do you agree with Frank? Why or why not? Explain.
4. Another student in your accounting class says that, as she understands it, most current liabilities appearing on the balance sheet arise from transactions involving operating activities. Do you agree? Why or why not? List three current liabilities that might appear on the balance sheet. For each one, explain the underlying transaction that must have occurred for that specific liability to arise. Indicate, for each liability, whether it is the result of an operating, financing, or investing activity.
Submitted: 6 years ago.
Category: Finance
Expert:  RD replied 6 years ago.

The fact that money available at the present time is worth more than the same amount in the future, due to its potential earning capacity is the time value of money. If you receive the money today you can invest and make money on it so that it grows in future. hence, the value currently would be higher than the same amount received in future.

Present value is the value of the money as of today.

Future value is the value of the money in some future date.

If you had $100 today and invested at 10% interest - the present value is $100 and the future value of the $100 after a year is $110.

2. Your uncle offers you a choice of $20,000 in 50 years or $45 today. If money is discounted at 13%, which offer should you choose? Explain.

The present value of $20000 received after 50 years at 13% interest will be $20000/(1+.13)^50 which is $44.38 today. Since this amount is less than $45, you would rather take $45 today and invest it at 13% and make more money in 50 years.


3. You and Frank are studying for an upcoming accounting exam. Frank says, "Contributed capital is basically the stockholders' equity of the company. It includes things like the common stock, paid-in capital in excess of par, preferred stock, and retained earnings." Do you agree with Frank? Why or why not? Explain.

No, do not agree with Frank.

Contributed capital is the funds collected from the investors.It includes the funds that are paid into the company by the stockholder such as - Preferred stock(par value and additional paid in capital) and Equity Stock or common stock(par value and additional paid in capital). It does not include retained earnings.


4. Another student in your accounting class says that, as she understands it, most current liabilities appearing on the balance sheet arise from transactions involving operating activities. Do you agree? Why or why not? List three current liabilities that might appear on the balance sheet. For each one, explain the underlying transaction that must have occurred for that specific liability to arise. Indicate, for each liability, whether it is the result of an operating, financing, or investing activity.

Yes, most of the current liabilities appearning on the balance sheet arise from transactions involving operating activities.

examples-

1. Accounts Payable - These accounts represents purchases made in regular course of business for materials or supplies on account from the vendors.(operating activity)

2. Income tax payable- resulting from the income tax due from the net income and expenses of the business (operating activity)

3. Accrued Liabilities - This account includes wages and payroll liabilities payable, sales tax payable and similar liabilities resulting from operating activities. (Operating activity)

 

RD, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 8784
Experience: MBA, CPA
RD and 4 other Finance Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
< Last | Next >
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1890
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    1755
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    838
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    397
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    324
    NASD Licensed Rep, 1997-2001, Business Attorney