Explain the Time Value of Money

question 69

Essay

Explain the time value of money.Incorporate terms such as discount rate and present value.

Identify the sequential order of business activities and how they are recorded in QuickBooks.

Recognize the correct process for recording customer payments and sales in QuickBooks.

Identify reports that track accounts receivable and understand their purpose.

Understand how different types of sales are recorded in QuickBooks.

---

Definitions:

Effective Interest Method

An accounting practice for amortizing a bond discount or premium on the basis of effective interest rate, rather than the straightforward straight-line method.

Discount

A reduction applied to the price of goods or services, or the difference between the nominal value of a financial instrument and its lower market price.

Bond Liability

A financial obligation of a company that arises when it issues bonds to raise funds, representing its need to repay the principal and interest to bondholders.

Interest Expense

The cost incurred by an entity for borrowed funds, typically reported on the income statement.