The Process of Investing and Financing
Investing and financing are in one way or another related to accounting. In a business environment, investing and financing are often under the jurisdiction of the accounting department.
Investing and financing are in one way or another related to accounting. In a business environment, investing and financing are often under the jurisdiction of the accounting department. Investing is putting money in a certain business undertaking with the expectation of future economic benefit. A company will release its funds for a certain investment only after the accountant prepares a feasibility study. This will determine the profitability of the intended project investment.
This usually involves large amount of money, hence careful analysis is needed. In the feasibility study; the amount of cash investment, payback period, projected income and expenses, etc. are reflected for proper review and approval of owners, investors and stockholders. If ever owners will approve the new investment based on the feasibility study, they have to finance it by releasing the needed cash. However, if cash is not sufficient, they have the option to avail of bank financing. Financing in this particular example is by securing a loan from the bank.
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