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The profitability index (PI) of a series of cash flows is found by calculating the present value of all the cash flows from a project (PV) and dividing the value by the initial investment (I). The profitability index is sometimes referred to as the value investment ratio.
A lease is a method of financing the use of an asset, and is an agreement between a lessee (who rents the asset), and a lessor (who owns the asset). The lessor is usually a lease company or finance company.
The lessee rents the asset from the lessor in return for a periodic rental payment. The lessee never owns the asset, and at the end of the term it is returned to the lessor or a secondary period of rental is entered into.
The cash disbursement journal is used to record cash paid by a business and in particular cash paid to suppliers for credit purchases. The cash disbursements journal is not part of the double entry posting and is simply a list of information relating to cash payments used to post the subsidiary and general ledgers.
The cash receipts journal is used to record cash received by a business and in particular cash collection from credit sales to customers. The cash receipts journal is not part of the double entry posting and is simply a list of information relating to cash receipts used to post the subsidiary and general ledgers.
