Tutor profile: Nouman W.
If there is conflict between NPV and IRR results e.g NPV is favouring project 1 and IRR is favouring project 2. What should be the finance manager choice in this case?
If there is conflict between NPV and IRR, then investor should go for NPV and choose project 1. Because NPV is widely accepted method and it gives you the positive value that can be generated above investments. Whereas IRR gives you the percentage and decision is made if IRR is higher than cost of capital. Percentage may be easy for investor to understand. But it can be confusing if multiple IRR situation arises. So NPV is better option as it is easy and widely accepted method.
Company is preparing its financial statements for year ending 31st December, 2018. Company received rent of $30,000 in advance on 1st October 2017 for next 6 months. Next 6 months rent was received on 1st April 2018 and 1st October 2018. What amount of revenue should be recorded in financial statements of 2018 and which accounting concept is being applied in this case?
According to international accounting standards, company should prepare its financial statement on accrual basis. "Incomes and expenses should be recorded in a year in these are incurred irrespective of cash flow". So rental income of 12 months from 1st January to 31st December should be recorded. Rent is being paid in advance for 6 months, so 3 months rent in october 2017 payment is related to 2018 (Jan, Feb, March) and 3 months rent in October 2018 payment is related to 2018 ( Oct, Nov, Dec) as well. Rental income for 2018 should be (30,000*3/6) + (30,000) + (30,000*3/6) = 60,000.
What is the difference between motivation and satisfaction of employee?
Motivation comes through financial rewards like salary, bonus, commission, vouchers, car, fuel and promotion. Motivation helps employee to achieve targets with high morale. On the other hand satisfaction does not come with financial rewards. Satisfaction is related to personal, social and cultural needs. If employer is ensuring safe working environment, appreciation of work, zero gender, color and religion discrimination, maternity leave and commuting transport then it means employee will be satisfied and will be loyal to company.
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