Explain the Use of Real and Nominal Discount Rates in Discounting

question 61

Essay

Explain the use of real and nominal discount rates in discounting cash flows.Which is used more often and why?

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Definitions:

Cash Payments Journal

A financial journal that records all cash outflows or payments made by a business, including expenses and asset purchases.

Purchases Journal

A record keeping document used to note all credit purchases of inventory and other items made by a company.

Establishment of Responsibility

An internal control principle focusing on assigning specific responsibilities to particular employees to reduce errors and fraud.

Segregation of Duties

An internal control measure where no single individual is given too much responsibility in areas of financial reporting, transaction processing, or asset management to prevent fraud and errors.