Starting from a free-market equilibrium, a binding price floor leads to excess supply and a decrease in quantity exchange. A price floor is a legal minimum price, below which the price is not allowed to fall, and it is usually set above the free-market equilibrium price to protect sellers.
For example, in the labor market, minimum wages are used to help workers. A binding price floor creates a surplus, also known as excess supply, because the minimum price set is higher than the equilibrium price. Therefore, the quantity supplied exceeds the quantity demanded, resulting in excess supply. The excess supply can lead to a buildup of unsold inventory, which may be wasteful.
With a binding price floor, the price is not allowed to eliminate the excess supply. Often, the government steps in to buy the excess supply. The government can use this approach to provide price support for farmers by buying surplus crops at the set minimum price. In markets for agricultural products, the government often imposes a price floor in an effort to protect producers.
In markets for products such as housing or gasoline, the government often imposes a price ceiling in an effort to protect consumers. A price ceiling is a legal maximum price that is set below the free-market equilibrium price, and it is usually used to protect buyers by keeping prices low. However, a binding price ceiling can lead to a shortage, also known as excess demand, because the maximum price set is lower than the equilibrium price. Therefore, the quantity demanded exceeds the quantity supplied, resulting in excess demand.
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Choose the correct answer: a, b or c, according to the text. (8 marks) 1. The amount of sleep a person needs depends on a. the food they eat b. how much they can get c. the individual d. the jobs they do 2. Having a bad night affects how clearly a person can think and this could be a. dangerous b. irritating c. a sign of depression d. ineffective in the long run 3. Most parents with babies lose hundreds of hours of sleep in the first a. decade b. life stage c. three years d. 12 months 4. Sleep problems can lead to very serious, long-term a. body problems b. immunity to many kinds of diseases c. lack of growth hormones d. mental and physical illnesses ( ( 5. People who are exhausted feel pain a. but they will recover as they grow older b. more than people who are not tired c. and this makes them sleep more d. all the time 6. a. two b. three c. four d. five specific problems are mentioned in relation to the effects of lack of sleep on a person's appearance: 7. The number of hours of sleep needed falls 수 a. as you get used to less b. as an adult c. when you are a teenager d. as a young baby 8. Research suggests that teenagers might do better at school if a. it finished earlier b. classes were fewer c. it started later d. school hours were shorter
According to the text, the correct answer is c. The amount of sleep a person needs depends on the individual.
The correct answer is c. the individual.
The correct answer is a. dangerous.
The correct answer is c. three years.
The correct answer is d. mental and physical illnesses.
The correct answer is b. more than people who are not tired.
The specific problems mentioned are not provided in the text, so the correct answer cannot be determined.
The correct answer is b. as an adult.
The correct answer is c. it started later.
The text states that the amount of sleep a person needs depends on the individual. This implies that different individuals may have different sleep needs, and it is not solely determined by factors such as the food they eat, the amount they can get, or the jobs they do.
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Calculate elasticity at every point on the graph, and state if it is elastic, inelastic or unitary elastic. $4 A 10 B 8 С Price 6 E 4 F 2 1 1 2 3 4 5 Number of hamburgers
Elasticity refers to the degree to which changes in a price affect the quantity of goods or services demanded by customers. The formula for elasticity is as follows: elasticity=percentage change in quantity demanded/percentage change in price.
As per the given graph, the following values can be computed: From point A to point B, there is a drop in quantity from 5 hamburgers to 1 hamburger when the price increases from $4 to $10.Elasticity=(Change in Quantity/Initial Quantity)/(Change in Price/Initial Price)=(4/5)/(6/4)= 0.67, which is elastic.
From point B to point C, there is a drop in quantity from 1 hamburger to 0.8 hamburgers when the price increases from $10 to $8.Elasticity=(Change in Quantity/Initial Quantity)/(Change in Price/Initial Price)=(0.2/1)/(2/10)= 1, which is unitary elastic. From point C to point E, there is a drop in quantity from 0.8 hamburgers to 0.2 hamburgers when the price increases from $8 to $4.Elasticity=(Change in Quantity/Initial Quantity)/(Change in Price/Initial Price)=(0.6/0.8)/(4/8)= 1.5, which is elastic.
From point E to point F, there is a drop in quantity from 0.2 hamburgers to 0.1 hamburgers when the price increases from $4 to $2.Elasticity=(Change in Quantity/Initial Quantity)/(Change in Price/Initial Price)=(0.1/0.2)/(2/4)= 1, which is unitary elastic. Hence, from the above values, we can conclude that the elasticity is elastic for points A-B and C-E, and unitary elastic for points B-C and E-F.
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4. A factor(s) used to measure an organization’s cultural strength is/are?
member agreement as to which values are core values
member agreement as to which core values are most important
the top management team’s use of values-based leadership
a & b
a & c
Factors that are used to measure an organization’s cultural strength are member agreement as to which values are core values, member agreement as to which core values are most important, and the top management team’s use of values-based leadership.
Culture is a critical aspect of any organization. It is something that is not tangible but is still present within the company. An organization's culture has a significant impact on its overall performance and success. A company's culture helps to shape the behavior and actions of employees, as well as the way that they interact with one another.Cultural strength is a measure of the strength of an organization's culture. It is a measurement of how aligned the company's values are, how strongly employees identify with those values, and how well those values are integrated into the daily life of the organization. An organization’s cultural strength is measured using several factors, including:Member agreement as to which values are core values: When a company's employees are united around a shared set of core values, it creates a strong sense of culture. This is because everyone in the organization is aligned around a common set of values.Member agreement as to which core values are most important: Not all values are created equal. Some values are more important than others in an organization. When employees are aligned around the most important values, it creates a stronger sense of culture.The top management team’s use of values-based leadership: Leadership is critical to building a strong culture. When top management is committed to a set of core values and is consistently modeling that behavior, it reinforces the importance of those values throughout the organization.
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Accrual accounting Obj2 SPREADSHEET Cash Bal., July 1st 20,000 P3-2 Ajament process Ob; 3 Espresso Health Care Inc. is owned and operated by Dr. Merri Eversole, the sole stockholder. During July 2011, Espresso Health Care entered into the following transactions: July 1 Received $18,000 from Bradshaw Company as rent for the use of a vacant office in Espresso Health Care's building. Bradshaw paid the rent six months in advance. 1 Paid $4,200 for an insurance premium on a general business policy. 6 Purchased supplies of $1,800 on account. 9 Collected $17,500 for services provided to customers on account. 11 Paid creditors $3,000 on account. 18 Invested an additional $50,000 in the business in exchange for capital stock. 20 Billed patients $49,000 for services provided on account. 25 Received $12,900 for services provided to customers who paid cash. 30 Paid expenses as follows: wages, $24,000; utilities. $6,000; rent on medical equipment, $5,000; interest, $200; and miscellaneous, $2,500. 30 Paid dividends of $10,000 to stockholders (Dr. Eversole). Instructions Analyze and record the July transactions for Espresso Health Care Inc., using the integrated financial statement framework. Record each transaction by date and show the balance for each item after each transaction. The July 1, 2011, balances for the balance sheet are shown below. Stockholders' Equity Assets Liabilities Accts. Pre Acc. Rec. Ins. Supp.+ Building - Dep. Land 24,500 700 1,000 150,000 -11,200 120,000 7,500 0 Accts. Un. Wages Notes Capital Ret Pay. Rev. Pay. Pay Stock Earn. 0 30,000 40,000 227,500 Adjustment data for Espresso Health Care Inc. for July are as follows: 1. Insurance expired, $800. 2. Supplies on hand on July 31, $1,100. Accrual Accounting Concepts 121 3. Depreciation on building, $2,000. 4. Unearned rent revenue earned, $3,000. 5. Wages owed employees but not paid, $1,700. 6. Services provided but not billed to patients, $9,000. Instructions Based upon the transactions recorded in July for Problem 3-1, record the adjustments for July using the integrated financial statement framework.
The integrated financial statement framework can be defined as a way of analyzing and recording a company's transactions in financial statements that provide insight into its financial performance.
To complete the task, we will begin by analyzing the transactions for Espresso Health Care Inc. as of July 2011 using the integrated financial statement framework and then we will record each transaction by date and show the balance for each item after each transaction.
July 1: Received $18,000 from Bradshaw Company as rent for the use of a vacant office in Espresso Health Care's building. Bradshaw paid the rent six months in advance. July 1st cash balance = $38,000 (20,000+18,000) July 1st unearned rent revenue = $18,000 July 1st prepaid insurance = $4,200 July 1st building depreciation = $11,200 July 6: Purchased supplies of $1,800 on the account.
July 30: Paid expenses as follows: wages, $24,000; utilities. $6,000; rent on medical equipment, $5,000; interest, $200; and miscellaneous, $2,500. July 30th cash balance = $30,700 (68,400 - 24,000 - 6,000 - 5,000 - 200 - 2,500)July 30th wages payable = $1,700 July 31st building depreciation = $13,200 ($11,200 + $2,000)July 31st prepaid insurance = $3,400 ($4,200 - $800) July 31st supplies = $700 ($1,800 - $1,100) July 31st unearned rent revenue = $15,000 ($18,000 - $3,000) July 31st wages payable = $1,700 ($1,700 + $0) = $1,700
July 31st services provided but not billed to patients = $9,000 ($9,000 + $0) = $9,000The adjusted balances of all accounts at the end of July 2011 are shown below: Stockholders' Equity Assets Liabilities Accts. Pre Acc. Rec. Ins. Supp.+ Building - Dep. Land 24,500 700 10,800 150,000 -13,200 120,000 7,500 0 Accts. Un. Wages Notes Capital Ret Pay. Rev. Pay. Pay Stock Earn. 15,000 3,400 0 277,500 1,700 49,000 1,800 0
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Prior to the enactment of workers' compensation statutes, what defenses would employers use in order to avoid paying for employee injuries?
Your response must be at least 200 words in length
Prior to the enactment of workers' compensation statutes, employers used various defenses to avoid paying for employee injuries. These defenses included contributory negligence, assumption of risk, and the fellow servant rule.
Before the introduction of workers' compensation laws, employers had several defenses at their disposal to avoid compensating employees for injuries sustained on the job. One common defense was contributory negligence, which held that if an employee's own negligence contributed to the injury, the employer would not be held liable. This defense often placed the burden of proving that the injury was solely the fault of the employee on the employer.
Another defense was the assumption of risk, which argued that by accepting employment, the employee assumed the risks associated with the job and therefore could not hold the employer responsible for any resulting injuries. This defense placed the responsibility on the employee to demonstrate that they were not aware of the risks involved or that the risks were unreasonably dangerous.
Additionally, employers could invoke the fellow servant rule, which held that if the injury was caused by the negligence of a co-worker rather than the employer or a defect in the workplace, the employer would not be liable. This defense relied on the idea that the employer could not be held responsible for the actions of individual employees.
Overall, these defenses allowed employers to shift the burden of proof onto employees, making it difficult for injured workers to obtain compensation. The introduction of workers' compensation laws aimed to address these challenges by providing a no-fault system that ensured injured employees received appropriate compensation regardless of fault or defenses employed by the employer.
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Sharp Co. bonds are selling in the market for $1.296.89. These bonds have 20 years remaining until maturity, and pay 11% coupon interest semi-annually on a $1.000 par value. What is the annual yield to maturity of the bonds? 10.25% 4.0% 06.75% 8.0% 9.45%
The annual yield to maturity of the bonds is approximately 7.34%.
To calculate the annual yield to maturity of the bonds, we can use the formula:
YTM = (C + (F - P) / n) / ((F + P) / 2)
Where:
YTM = Yield to Maturity
C = Coupon Payment
F = Face Value (Par Value)
P = Purchase Price
n = Number of Periods
In this case, the coupon payment (C) is $1,000 * 11% / 2 = $55, the face value (F) is $1,000, the purchase price (P) is $1,296.89, and the number of periods (n) is 20 * 2 = 40.
Substituting the values into the formula:
YTM = ($55 + ($1,000 - $1,296.89) / 40) / (($1,000 + $1,296.89) / 2)
YTM = (55 + (-296.89) / 40) / (1296.89 / 2)
YTM = (55 - 7.42) / 648.445
YTM = 47.58 / 648.445
YTM ≈ 0.0734
Multiplying by 100 to convert to a percentage:
YTM ≈ 7.34%
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After you initialize a new Git repository and create a file named "test.txt", which of the following commands will not work if issued? git commit -m "test.txt file added" Ogit add test.txt git add. git log Ogit status
Among the provided commands, the command "git add." will not work if issued after initializing a new Git repository and creating a file named "test.txt." The other commands, namely "git commit -m "test.txt file added"," "git add test.txt," "git log," and "git status," will work as expected.
After initializing a new Git repository and creating a file named "test.txt," the following commands will work as intended:
"git commit -m "test.txt file added"" - This command will commit the changes made to the file "test.txt" to the repository, creating a new commit with the specified message."git add test.txt" - This command will stage the file "test.txt" for commit, preparing it to be included in the next commit."git log" - This command will display the commit history of the repository, including the commit made for the addition of the "test.txt" file."git status" - This command will show the current status of the repository, indicating any modified or untracked files, including the "test.txt" file.However, the command "git add." will not work as intended. The correct command should be "git add ." (with a space between "add" and "."). The "git add ." command is used to stage all changes in the current directory and its subdirectories for commit. Without the space, the command will not be recognized by Git and will result in an error.
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Over the last 10 years, price of new models of smart Phones increased by 25%. At the I same time, the number of sold phones has increased from 250KD to 400KD. Does this example demonstrate that the Law of Demand is false? Explain why or why not. Use graphs.
To determine whether the example provided contradicts the Law of Demand, we need to analyze the relationship between price and quantity demanded.
The Law of Demand states that, all else being equal, as the price of a good increases, the quantity demanded decreases, and vice versa. Let's examine the example using graphs to understand the relationship between price and quantity demanded.
Graph 1: Demand Curve
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In the above graph, we have the demand curve (D) representing the relationship between price (P) and quantity demanded (Q). According to the Law of Demand, the demand curve slopes downward from left to right, indicating an inverse relationship between price and quantity demanded.
Now, let's analyze the example:
Price of new smartphones increased by 25% over 10 years. This indicates a shift in the demand curve, resulting in a new demand curve (D').
Graph 2: Shifted Demand Curve
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The demand curve (D') has shifted to the right due to the increase in the number of smartphones sold from 250KD to 400KD. This suggests an increase in the quantity demanded at each price level.
However, we do not have information on whether the increase in quantity demanded is solely due to the decrease in price. If the price decrease led to the increase in quantity demanded, it would align with the Law of Demand.
Graph 3: Law of Demand
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The graph above represents the Law of Demand, where a decrease in price (P) leads to an increase in quantity demanded (Q).
In conclusion, based on the information provided, it is not possible to determine if the Law of Demand is false. The increase in the number of smartphones sold could be due to factors other than a decrease in price, such as technological advancements, increased consumer preferences, or marketing efforts.
To make a definitive conclusion, more data and analysis would be required to isolate the impact of price changes on quantity demanded.
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Suppose you are on FindMeLove.com. You joined for free, but you have to upgrade to a paid version if you want to see full-size photos or send personalized messages. So far, you are fine with the free version. But then, a really attractive guy messages you and wants to chat. To respond, you have to upgrade. Once you do, you never hear from him again. Only later do you realize that his profile had a little "VC" in the upper corner. That meant he was a "virtual cupid," that is, not a real person. Is there anything wrong with that?( 200 words)
Yes, there is something wrong with that. It is unethical to create fake profiles on dating sites to lure individuals into upgrading to a paid membership. The dating site should not permit such activities and should take steps to ensure that the profiles on the site are real.
This behavior is detrimental to the website's reputation and leads to a lack of trust among its users. The site should disclose the existence of virtual cupids and other automated profiles so that users can make informed decisions about whether or not to upgrade to a paid version. A site's reputation is everything, and users will not trust a site that employs such tactics. While virtual cupids may seem like a harmless way to entice users to upgrade, it is a dishonest practice that harms the site's credibility and user trust.
In conclusion, while FindMeLove.com may not have explicitly done anything illegal, they have employed deceptive and unethical practices to lure users into upgrading to a paid membership, which is not acceptable. Therefore, there is something wrong with it.
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An amount of P=$5.45 million last year is equivalent to F=$6.82 million now at an interest rate of (i=?): 25.137% DO 42.22% CO 20%.B 29.6%-A
To calculate the interest rate (i), we can use the formula for calculating the future value (F) of an investment based on the present value (P) and the interest rate per period (i):
F = P * (1 + i)
Given that P = $5.45 million and F = $6.82 million, we can rearrange the formula to solve for i:
i = (F / P) - 1
Substituting the values:
i = ($6.82 million / $5.45 million) - 1
i ≈ 1.25 - 1 = 0.25
So, the interest rate (i) is approximately 25%.
Therefore, the closest interest rate option is 25.137%.
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Suppose a society contains two individuals Joe, who smokes, and Tanya, who does not. They each have the same utility function U(C) In(C). If they are healthy, they will each get to consume their income of $15,000. If they need medical attention, they will have to spend S10,000, leaving them $5,000 for conumption. Smokers have a 12% chance of needing medical attention, and nonsmokers have a 2% chance An insurance company is wiling to insure Joe and Tanya The twist here is that the insurance company offers two different kinds of policies. One policy is called the "low deductible," (L) for which the insurance company will pay any medical costs over S3,000. The other is a "high deductible," (H) for which the insurance company will pay any medical costs over $8000 a. What is the actuarially fair premium for each type of policy for Joe and Tanya? b. If the insurance company can determine who smokes and who does not, and they charge the actuarially fair prices to each, what policy will Joe select? Tanya? (Think carefully about calculating expected utilities for each under the different policies.) c. Now, suppose that the insurer cannot determine who smokes and who doesn't. The insurer sets prices for each product. The price of L is $840 and the price of H is $40. (Why did I choose these numbers) What will Joe and Tanya choose to do? Will adverse selection push Tanya out of the market? [Hint: No.] Calculate the total expected utility for our society under this outcome d. What has happened here? What does the second policy option accomplish? e. Suppose the government were to intervene and provide full insurance at a single price and charge everyone the same actuarially fair amount. How would the total social utility compare to that of part c? (Ignore any moral hazard or other unintended consequences.)
By pooling the risks and spreading the costs across the population, full insurance can lead to a more equitable outcome and potentially higher overall welfare.
a. To determine the actuarially fair premium for each type of policy, we need to calculate the expected costs for the insurance company for both smokers and nonsmokers under each policy.
For the low deductible policy (L):
Joe, a smoker, has a 12% chance of needing medical attention, so the expected cost for the insurance company is 0.12 * $10,000 = $1,200.
Tanya, a nonsmoker, has a 2% chance of needing medical attention, so the expected cost is 0.02 * $10,000 = $200.
For the high deductible policy (H):
Joe's expected cost is 0.12 * ($10,000 - $8,000) = $240.
Tanya's expected cost is 0.02 * ($10,000 - $8,000) = $40.
The actuarially fair premium is the expected cost for the insurance company, so:
For the low deductible policy: Joe's premium should be $1,200, and Tanya's premium should be $200.
For the high deductible policy: Joe's premium should be $240, and Tanya's premium should be $40.
b. If the insurance company charges actuarially fair prices and Joe and Tanya are rational, Joe would choose the low deductible policy because his expected cost under that policy ($1,200) is lower than his expected cost under the high deductible policy ($240). Tanya, on the other hand, would choose the high deductible policy because her expected cost under that policy ($40) is lower than her expected cost under the low deductible policy ($200).
c. In this scenario, where the insurer cannot determine who smokes and who doesn't, Joe and Tanya will choose the policy that provides them with the highest expected utility given the prices. Let's calculate their expected utilities under each policy:
For Joe:
Under the low deductible policy: Expected utility = 0.88 * U($15,000 - $1,200) + 0.12 * U($15,000 - $3,000).
Under the high deductible policy: Expected utility = 0.88 * U($15,000 - $240) + 0.12 * U($15,000 - $8,000).
For Tanya:
Under the low deductible policy: Expected utility = 0.98 * U($15,000 - $200) + 0.02 * U($15,000 - $3,000).
Under the high deductible policy: Expected utility = 0.98 * U($15,000 - $40) + 0.02 * U($15,000 - $8,000).
By comparing the expected utilities under each policy, Joe and Tanya will choose the policy that maximizes their expected utility.
d. In this situation, adverse selection occurs because Joe, being a smoker, has a higher probability of needing medical attention compared to Tanya, a nonsmoker. This leads to different expected costs and preferences for each policy. The second policy option of high deductibles helps separate the individuals based on their risk profiles, as Joe is more likely to opt for the low deductible policy due to his higher expected costs, while Tanya is more likely to choose the high deductible policy with lower expected costs.
e. If the government were to provide full insurance at a single price and charge everyone the same actuarially fair amount, the total social utility would likely be higher than in part c. This is because full insurance would eliminate the adverse selection problem, allowing both Joe and Tanya to choose the policy that maximizes their expected utility without being constrained by differing risk profiles.
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What is the fundamental problem with estimating a risk model when the number of stocks in the universe is very large?
When the number of stocks in the universe is very large, the fundamental problem with estimating a risk model is the computational complexity of the process.
It is not possible to test all possible combinations of stocks, and so a subset must be chosen for analysis. This subset must be large enough to capture the relevant information, but not so large as to be computationally infeasible. Additionally, any assumptions made in the modeling process must be based on realistic assumptions about the nature of the underlying assets and the market in which they trade.Furthermore, the selection of stocks to be included in a risk model is often based on certain criteria such as market capitalization, liquidity, and volatility. However, these criteria may not always capture the true risk of a particular stock, and as a result, the model may underestimate or overestimate risk.
Another issue that arises when dealing with a large number of stocks is that it can be difficult to distinguish between idiosyncratic and systematic risk. A model that is not able to accurately separate these two types of risk may be less effective at predicting future returns or managing portfolio risk. In conclusion, estimating a risk model when the number of stocks in the universe is very large is a challenging task that requires careful consideration of computational complexity, underlying asset characteristics, and modeling assumptions.
The fundamental problem is that it can be difficult to choose a subset of stocks that captures the relevant information while not being computationally infeasible. Additionally, it can be difficult to distinguish between different types of risk, which can make it more challenging to effectively manage portfolio risk.
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YAHO Ventures is a trading organisation. The trial balance of the firm for the year ended 31 December 2016 is as follows:- CR DR N N Inventory(01/01/2016) 61,290 Revenue 489,600 Purchases 320,560 Salaries & Wages 99,925 Motor Vehicles 129,375 Furniture & Fittings 55,620 Motor Vehicle Expenses 17,190 Insurance 2,025 Office Expenses 5,580 Rates 7,775 Lighting Expenses 4,295 Trade receivables & Payables 100,800 44,800 Cash & Bank 12,465 31,050 Drawings Capital 313,550 847.950 847,950 92 You are also provided with the following additional information. (i) Inventories as at 31 December2016 N76,230. (ii) Rates outstanding as at 31 December, 2016 amounts toN1,555. (iii) Insurance expenses include 315 meant for the next period up to 31 March, 2017 Accrued expenses on lighting amounts to 835. (iv) (v) Depreciation provisions are as follows: Motor Vehicles 20% Furniture & Fittings 10% (vi) 212% should be provided on Receivables for doubtful debts. You are required to: (b) Extract the Adjusted Trial Balance or Final Trial Balance
The Adjusted Trial Balance or Final Trial Balance for YAHO Ventures as of December 31, 2016 is 997,975 997,975.
To extract the adjusted trial balance or final trial balance, we need to consider the additional information and make the necessary adjustments. Here is the adjusted trial balance or final trial balance for YAHO Ventures as of December 31, 2016:
CR DR
Inventory (01/01/2016) 61,290
Purchases 320,560
Salaries & Wages 99,925
Motor Vehicles 129,375
Furniture & Fittings 55,620
Motor Vehicle Expenses 17,190
Insurance 2,025
Office Expenses 5,580
Rates 7,775
Lighting Expenses 4,295
Trade receivables 100,800
Trade payables 44,800
Cash & Bank 12,465
Drawings 31,050
Capital 313,550
Revenue 489,600
Depreciation Expense:
Motor Vehicles 25,875
Furniture & Fittings 5,562
Insurance Expense (adjusted) 1,710
Rates Expense (adjusted) 6,220
Lighting Expense (adjusted) 5,130
Accrued Expenses - Lighting 835
Provision for Doubtful Debts 2,141
Inventory (31/12/2016) 76,230
Total 997,975 997,975
Please note that the figures may differ depending on the specific adjustments made based on the additional information provided.
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Consider an economy consisting of some firms with flexible prices and some with rigid prices. Let pf denote the price set by a representative flexible-price firm and Pr the price set by a representative rigid-price firm. Flexible-Price firms set their prices after m is known; Rigid-price firms set prices before m is known. This Flexible-price firms set Pf=Pi*= (1-Ø) P+Øm,and, and, and rigid-price firm set Pr=EPi*= (1-Ø) EP+ØEm, where E denotes the expectation of a variable as of when the rigid –price firms set their prices.
Assume that fraction q of firms have rigid prices so that P=qpr+ (1-q) pf
a) Find pr in terms of Em and the parameters of the model
To find pr in terms of Em and the parameters of the model, we can use the equation P = qPr + (1 - q)Pf, which represents the overall price level in the economy.
Substituting the expressions for Pr and Pf:
P = q(EPi*) + (1 - q)(Pi*)
P = q[(1 - Ø)EP + ØEm] + (1 - q)[(1 - Ø)P + Øm]
Now, we can simplify this equation to isolate pr:
P = q(1 - Ø)EP + qØEm + (1 - q)(1 - Ø)P + (1 - q)Øm
P = qEP - qØEP + qØEm + (1 - Ø)P + Øm - qØm
Next, solving for Pr by rearranging the equation:
Pr = P - (1 - q)Pf
Pr = qEP - qØEP + qØEm + (1 - Ø)P + Øm - qØm - (1 - q)(1 - Ø)P - (1 - q)Øm
Pr = qEP - qØEP + qØEm - qØP + qØP + Øm - Øm
Pr = qEP - (q - 1)ØP + Ø(m + (1 - q)P + qEm)
Finally, we can rewrite this expression in terms of Em and the parameters of the model:
Pr = qEP + Ø(m + (1 - q)P - ØP + qEm)
Pr = qEP + Ø(m - qØP + (1 - q)P + qEm)
Pr = qEP + Ø(m - q(1 - Ø)P + qEm)
Therefore, pr is given by qEP + Ø(m - q(1 - Ø)P + qEm) in terms of Em and the parameters of the model.
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Assume the risk-free rate is 3% and the market return is 8%. According to the Capital Asset Pricing Model (CAPM), what is the return of a stock with beta of 1.75?
A. 15.8%
B. 8.75%
C. 11.1%
D. 7.8%
Capital Asset Pricing Model (CAPM) is used to estimate the required rate of return for an asset. The model calculates the expected return of an asset based on its beta and expected market returns. The correct answer is option A) 15.8%
The CAPM model is expressed as follows:
$$r_i = r_f + \beta_i (r_m - r_f)$$ Where,$$ r_i = Expected return of the stock. $$r_f = Risk-free rate of return.$$ r_m = Expected market return. $$ \ beta_i = Beta of the stock.
Substituting the given values in the above formula, we get;$$r_i = 3 + 1.75(8 - 3)$$. On solving the above equation, we get;$$r_i = 15.8 \% $$. Thus, the return of a stock with a beta of 1.75, according to the Capital Asset Pricing Model (CAPM), is 15.8%.
The CAPM is predicated on the idea that investors are risk-averse and want to maximize profits while reducing risk exposure. The risk-free rate of return and the risk premium, in accordance with the model, define the expected return on investment.
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Which of the following is not true of deficits?
Supply-side policies contribute to budget deficits by cutting taxes.
Demand-side policies contribute to budget deficits by increasing government spending.
Deficits in any budget year are repaid in the next year's budget.
Deficits result in increased debt.
The statement that is not true of deficits is "Deficits in any budget year are repaid in the next year's budget.
"Explanation: Deficits occur when the government spends more money than it receives through taxes and other sources of revenue. These deficits can have several effects on the economy. It's essential to note that deficits can lead to debt because the government has to borrow money to finance the deficits.In this context, the statement that deficits in any budget year are repaid in the next year's budget is not true. When there is a deficit in any budget year, it may result in increased debt. Therefore, the government will need to pay back this debt over time, and it cannot be repaid in the next year's budget. Thus, the statement that deficits in any budget year are repaid in the next year's budget is false.
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Determine whether each statement describes the income effect, the substitution effect, or neither. Assume that all other variables are held constant a. The price of lobster doubles, making Henri feel less wealthy. As a result, Henri buys fewer lobsters. a b. The price of chicken falls by 50.75 a pound. Since chicken is now relatively less expensive than ground beef. Mary buys more chicken and less beef c. The average price of a DVD falls by 15 percent. Tom buys more DVDs because his monthly movie budget can now stretch further.
The given situation describes the income effect, substitution effect, or neither is shown below:
a. Income effect
b. Substitution effect
c. Neither
Let us now understand the concepts of the income effect and the substitution effect.
Income Effect:
It is a change in demand for a good or service due to a change in the purchasing power of the customer's income. It is also known as a change in the real income of the consumer.
When the price of a good or service rises, the consumer's real income decreases because they must devote more of their income to the good or service. Similarly, when the price of a good or service decreases, the consumer's real income increases because they can spend less on the good or service and more on other things.
Substitution Effect:
It occurs when a change in the price of a good or service induces consumers to switch to a substitute product. It reflects the fact that consumers will purchase more of a good when its price decreases relative to other goods, and they will purchase less of it when its price increases relative to other goods. Hence, consumers look for alternatives that can fulfill their needs and are relatively cheaper to substitute.
Neither: No effect occurs due to a change in the price of a good or service.
Therefore, neither the income effect nor the substitution effect occurs when the average price of a DVD falls by 15%. Therefore, the given situation describes the income effect, substitution effect, or neither is shown below:
a. Income effect
b. Substitution effect
c. Neither:
a. The price of lobster doubles, making Henri feel less wealthy. As a result, Henri buys fewer lobsters. - Income effect
b. The price of chicken falls by 50.75 a pound. Since chicken is now relatively less expensive than ground beef. Mary buys more chicken and less beef - Substitution effect
c. The average price of a DVD falls by 15 percent. Tom buys more DVDs because his monthly movie budget can now stretch further. - Neither
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A local restaurant that specialises in freshly made pasta dishes for take away and delivery has seen a significant increase in demand. The restaurant’s own staff currently do the deliveries. In the attempt to satisfy the increased demand, the restaurant management feels that they are being inefficient. They have found themselves paying ad hoc overtime, hiring additional bikes/drivers a short notice, having to outsource different tasks/orders/business functions etc. They also have a small working team conducting various roles but with the increased orders some mistakes are being made resulting in additional costs to rectify issues (e.g. compensation, hiring short notice support, issues with monitoring and managing stock etc.). They have a rather basic information system and mainly use spreadsheets (MS Excel) for most operating functions.
The company feel that they are in a position where they need to plan for the future and hire you as a consultant to consider means in which they can reduce average costs in the long run so that they can efficiently keep up with demand. Using your knowledge of economies of scale and diseconomies of scale consider means in which the company can reduce average costs over the long run. (N.B you should use diagrams to support your answer, you do not need to consider actual costs but you should consider initiatives that would aid reducing average costs over the long run that would be better suited to this company)
The local restaurant specializing in freshly made pasta dishes for take away and delivery has experienced a significant increase in demand, leading to inefficiencies in their operations. To reduce average costs in the long run and efficiently keep up with demand, the company can consider implementing initiatives related to economies of scale. This includes optimizing production processes, investing in technology and automation, and improving resource allocation.
To reduce average costs in the long run, the restaurant can focus on achieving economies of scale. By increasing the scale of operations, the company can benefit from cost advantages that arise from spreading fixed costs over a larger output. One way to achieve this is by optimizing production processes.
This may involve streamlining workflows, improving production efficiency, and reducing waste. By investing in technology and automation, the restaurant can enhance productivity and reduce labor costs.
For example, they could consider using automated order management systems, inventory tracking software, and delivery route optimization tools. Additionally, improving resource allocation and planning can help avoid ad hoc overtime and reduce mistakes. This could involve better scheduling of staff, implementing quality control measures, and ensuring efficient stock management.
The implementation of these initiatives can lead to cost savings in the long run as the restaurant achieves economies of scale. However, it is important for the company to carefully analyze the specific needs and constraints of their operations to determine the most suitable strategies for reducing average costs.
The use of diagrams can help visualize the potential cost reductions and illustrate the relationship between output and average costs in the long run.
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Explain how a company may utilize a net capital loss for tax
purposes.
After this is explained, give an example you’ve seen or read.
Provide your reference.
A company may utilize a net capital loss for tax purposes through a process called capital loss carryforward or carryback.
When a company sells an asset and incurs a capital loss, meaning the sale proceeds are lower than the asset's original cost, the company can use this loss to offset capital gains in the future or past years.
In a capital loss carryforward, the company can carry forward the net capital loss to future tax years and use it to offset capital gains realized in those years. This helps to reduce the company's tax liability in the future when it generates capital gains.
In a capital loss carryback, the company can carry back the net capital loss to previous tax years and use it to offset capital gains realized in those years. This allows the company to claim a refund for taxes paid in the past when it had capital gains.
By utilizing net capital losses, companies can mitigate their tax burden and improve their overall tax efficiency. It provides a mechanism for balancing out gains and losses over time and optimizing tax liabilities.
Example:
Let's say a company sells an investment property for $200,000, which originally cost them $300,000. This results in a capital loss of $100,000. In the same tax year, the company also realizes a capital gain of $50,000 from the sale of another asset.
In this case, the company can utilize the net capital loss of $100,000 to offset the capital gain of $50,000. This would result in a taxable capital gain of $0 for the year, effectively reducing the company's tax liability.
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The following schedule shows the excess of cash receipts over cash disbursements projected for the Zoptic Company for 2021: Q1 Q2 Q3 04 Year Excess (deficiency) of cash available over disbursements $(126,300) $(44,680) $130,780 $45,300 $5,100 The company borrows and repays from an open line of credit in round $100 amounts. Loan related payments are made in periods when cash is available with interest paid on only the portion of any principal being repaid. The current balance (principal plus accrued interest) in the line of credit account is $2,704 for the borrowing that occurred in the last quarter of the previous year. The annual interest rate is 16%. A minimum cash reserve of $600 must be maintained each quarter. The opening balance for the year is expected to be $1,080. Required: Prepare a cash budget for each quarter and for the year in total and calculate the annual interest expense on the line of credit that would appear on the budgeted income statement for the year 2021. (Any "Repayments" and "Interest" should be indicated by a minus sign.)
To prepare the cash budget for each quarter and for the year 2021, we need to consider the excess or deficiency of cash available over disbursements, interest payments, and the minimum cash reserve requirement.
Quarter 1:
Opening balance: $1,080
Excess of cash available over disbursements: $(126,300)
Loan borrowing: $100 (to cover the deficiency)
Loan repayment: $0 (no repayment needed)
Interest payment: $0
Minimum cash reserve: $600
Closing balance: $(126,520)
Quarter 2:
Opening balance: $(126,520)
Excess of cash available over disbursements: $(44,680)
Loan borrowing: $100 (to cover the deficiency)
Loan repayment: $0 (no repayment needed)
Interest payment: $0
Minimum cash reserve: $600
Closing balance: $(44,900)
Quarter 3:
Opening balance: $(44,900)
Excess of cash available over disbursements: $130,780
Loan borrowing: $100 (to cover the deficiency)
Loan repayment: -$100 (repayment made from excess cash available)
Interest payment: $100 (16% of $100 borrowed)
Minimum cash reserve: $600
Closing balance: $130,480
Quarter 4:
Opening balance: $130,480
Excess of cash available over disbursements: $45,300
Loan borrowing: $0 (no borrowing needed)
Loan repayment: -$100 (repayment made from excess cash available)
Interest payment: $0
Minimum cash reserve: $600
Closing balance: $45,800
Yearly cash budget:
Opening balance: $1,080
Total excess (deficiency) of cash available over disbursements: $5,100
Total loan borrowing: $200
Total loan repayment: -$200
Total interest payment: $100 (from Quarter 3)
Minimum cash reserve: $600 (maintained each quarter)
Closing balance: $5,180
Annual interest expense on the line of credit that would appear on the budgeted income statement for the year 2021 is $100.
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View Policies Current Attempt in Progress Bramble Sports sells volleyball kits that it purchases from a sports equipment distributor. The following static budget based on sales of 2,500 kits was prepared for the year. Fixed operating expenses account for 75% of total operating expenses at this level of sales. Sales Revenue $ 230,000 Cost of goods sold (all variable) 170,000 Gross margin 60,000 Operating expenses 50,000 Operating income $ 10,000 Prepare a flexible budget based on sales of 1,000, 2,700, and 3,960 units. (Round unit values to 2 decimal places eg. 15.25 and all other answers to 0 decimal places, eg. 1525, If operating income is negative, enter amounts using a negative sign preceding the number eg.-45 or parentheses eg. (45)) Unit 1,000 2,700 3,960 eTextbook and Media Save for Later > < $ $ L $ tA Unit $ 1,000 $ $ 2,700 $ 3,960 $ $
Policies Current Attempt in Progress Bramble Sports sells volleyball kits that it purchases from a sports equipment distributor.
Flexible budget based on sales of 1,000, 2,700, and 3,960 units is given below:
Calculation of Unit Selling Price
Unit Selling Price = Sales Revenue / Number of Units sold
Unit Selling Price for Sales of 2,500 kits = $230,000 / 2,500 = $92.00 per kit
Using the high-low method, the unit variable cost is calculated as follows:
Unit Variable Cost = Change in Cost / Change in Activity
Level of Activity Cost Cost per unit2,500 $170,000 $68.001,000 ($68.00 - $65.67) ($2.33)2,700 ($68.00 - $65.67) ($2.33)3,960 ($68.00 - $65.67) ($2.33)
Calculation of Flexible Budget
Flexible Budget = Fixed Costs + Variable Cost per Unit * Number of Units Sold
Sales Revenue = Unit Selling Price * Number of Units Sold
Flexible Budget = Fixed Costs + (Unit Variable Cost * Number of Units Sold)
Sales Revenue:Variable cost per unit = $65.67
Fixed operating expenses = $37,500 (75% of $50,000)
Flexible Budget Calculation for Sales of 1,000 Kits:
Flexible Budget = $37,500 + ($65.67 * 1,000) = $103,170
Sales Revenue for 1,000 kits = $92.00 * 1,000 = $92,000
Operating Income = $92,000 - $103,170 = ($11,170)
Flexible Budget Calculation for Sales of 2,700 Kits:
Flexible Budget = $37,500 + ($65.67 * 2,700) = $208,359
Sales Revenue for 2,700 kits = $92.00 * 2,700 = $248,400
Operating Income = $248,400 - $208,359 = $40,041
Flexible Budget Calculation for Sales of 3,960 Kits:
Flexible Budget = $37,500 + ($65.67 * 3,960) = $313,507
Sales Revenue for 3,960 kits = $92.00 * 3,960 = $364,320
Operating Income = $364,320 - $313,507 = $50,813
The table given below summarizes the flexible budget calculations for different levels of sales:
Number of Units Sold Sales Revenue Variable Cost Fixed Cost Operating Income 1,000 $92,000 $65,670 $37,500 ($11,170) 2,700 $248,400 $177,609 $37,500 $40,041 3,960 $364,320 $259,708 $37,500 $50,813
Note: If operating income is negative, enter amounts using a negative sign preceding the number eg.-45 or parentheses eg. (45).
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what is the expected standard deviation of stock a's returns based on the information presented in the table? outcome probability of outcome stock a return in outcome
In probability theory and statistics, standard deviation is a measure of the amount of variation or dispersion of a set of values from the mean value. This means that the higher the standard deviation, the wider the range of values and vice versa.
The expected standard deviation of Stock A's returns based on the information presented in the table can be calculated using the following steps: Calculate the expected return of Stock A: To do this, multiply each outcome by its probability and sum the results. The formula for calculating the expected return is:E(R) = Σ[Pi x Ri]Where E(R) is the expected return, Pi is the profitability of outcome i, and Ri is the return of outcome i.
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B) Graph, explain & give a detailed example for the following:
Explain & give examples: Movement along the supply curve :_____
Graph examples:
Explain & give examples: Shift of the supply curve: _____
Graph example:
Equilibrium: _____
Graph example:
In economics, movement along the supply curve, shift of the supply curve, and equilibrium are important concepts. Movement along the supply curve refers to changes in quantity supplied due to changes in price, while a shift of the supply curve occurs when factors other than price affect the quantity supplied. Equilibrium is the point at which the quantity demanded equals the quantity supplied. Graphs can illustrate these concepts visually, showing the relationship between price and quantity.
Movement along the supply curve occurs when there is a change in the quantity supplied due to a change in price. When the price of a product increases, the quantity supplied generally increases as well. Conversely, when the price decreases, the quantity supplied tends to decrease. This movement along the supply curve is shown as a change in position along the curve while keeping other factors constant. For example, if the price of oranges rises, orange producers may increase the quantity of oranges they are willing to supply.
A shift of the supply curve occurs when factors other than price affect the quantity supplied. These factors can include changes in production costs, technology, government regulations, or input prices. When any of these factors change, the entire supply curve shifts to a new position. For instance, if a new technology is introduced that reduces the cost of production for smartphones, the supply curve for smartphones would shift to the right, indicating a higher quantity supplied at every price level.
Equilibrium is the point where the quantity demanded equals the quantity supplied, resulting in a stable market outcome. At equilibrium, there is no excess supply or excess demand. The price at equilibrium is often referred to as the market-clearing price. Graphically, equilibrium is represented by the intersection of the demand and supply curves. For example, if the demand for a certain type of shoes increases while the supply remains unchanged, the price of the shoes will rise until the quantity demanded matches the quantity supplied, establishing a new equilibrium.
In conclusion, movement along the supply curve represents changes in quantity supplied due to price changes, a shift of the supply curve occurs when factors other than price affect supply, and equilibrium is the point of balance where quantity demanded equals quantity supplied. Graphs can visually demonstrate these concepts, providing a clearer understanding of the relationship between price and quantity in the market.
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Sunland Company purchased factory equipment with an invoice price of $80,100. Other costs incurred were freight costs, $1,080; installation wiring and foundation, $2,290; material and labor costs in testing equipment, $840; oil lubricants and supplies to be used with equipment, $980; fire insurance policy covering equipment, $1,970. The equipment is estimated to have a $8,000 salvage value at the end of its 10-year useful service life. Compute the acquisition cost of the equipment. Acquisition cost of the equipment $ (Round answer to 1 decimal place, eg. 15.5%) If the straight-line method of depreciation was used, the annual rate applied to the depreciable cost would be %.
the acquisition cost of the equipment is $87,260, and the annual rate applied to the depreciable cost using the straight-line method of depreciation would be 9.08%.
The acquisition cost of the equipment purchased by Sunland Company will be computed as follows:
Acquisition cost = Invoice price of the equipment + Other costs incurred
Freight costs = $1,080
Installation wiring and foundation = $2,290
Material and labor costs in testing equipment = $840
Oil lubricants and supplies to be used with equipment = $980
Fire insurance policy covering equipment = $1,970
Acquisition cost = $80,100 + $1,080 + $2,290 + $840 + $980 + $1,970 = $87,260
Depreciable cost = Acquisition cost - Salvage value = $87,260 - $8,000 = $79,260
The useful service life of the equipment is 10 years.
Annual depreciation = Depreciable cost ÷ Useful service life = $79,260 ÷ 10 = $7,926
The annual rate applied to the depreciable cost would be:
Annual rate = Annual depreciation ÷ Acquisition cost = ($7,926 ÷ $87,260) x 100% = 9.08%
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You are purchasing a house that costs $540,000 and the bank agrees to loan you 90% of the purchase price. Your down payment will cover the other 10%. The 90% mortgage loan will be fully amortizing over 17 years, with monthly payments and an interest rate of 6% (APR). How much of the Month 1 payment is interest?
The interest portion of the first month's payment is $2,700. To calculate the amount of interest in the first month's payment, we need to consider the loan amount, the interest rate, and the loan term.
Given:
Loan amount: $540,000 (90% of the purchase price)
Interest rate: 6% APR
Loan term: 17 years (monthly payments)
First, let's calculate the monthly interest rate:
Monthly interest rate = Annual interest rate / 12
Monthly interest rate = 6% / 12 = 0.005 (or 0.5%)
Next, let's calculate the monthly payment using an amortization formula. The formula for calculating a fully amortizing loan payment is:
Monthly payment = P * r * (1 + r)^n / ((1 + r)^n - 1)
Where:
P = Loan amount
r = Monthly interest rate
n = Total number of monthly payments
Using the given values:
P = $540,000
r = 0.005
n = 17 * 12 = 204 (17 years * 12 months)
Monthly payment = $540,000 * 0.005 * (1 + 0.005)^204 / ((1 + 0.005)^204 - 1)
Now, let's calculate the interest portion of the first month's payment:
Interest payment = Loan amount * Monthly interest rate
Interest payment = $540,000 * 0.005
Therefore, the interest portion of the first month's payment is $2,700.
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Which of the following statements regarding Partnership theory is correct? Multiple Choice All types of partnerships subject all the partners to unlimited personal liability. A limited liability partnership, often formed by professionals such as doctors and lawyers, protects each partner from unlimited personal liability from the activities of their partners, but not from their own professional activities. In a general partnership, a partner will not be held liable for the contracts signed by another partner. A limited liability partnership, often formed by professionals such as doctors and lawyers, protects each partner from unlimited personal liability, whether from their own professional activities or those activities of their partners.
A limited liability partnership protects each partner from unlimited personal liability, whether from their own professional activities or those activities of their partners.
A limited liability partnership, often formed by professionals such as doctors and lawyers, protects each partner from unlimited personal liability, whether from their own professional activities or those activities of their partners. In a limited liability partnership (LLP), the partners are shielded from personal liability for the actions and debts of the partnership. This means that each partner is protected from being personally responsible for the partnership's liabilities or the negligent acts of other partners.
This applies not only to the partnership's activities as a whole but also to the individual professional activities of each partner within the LLP. This is different from a general partnership, where partners are typically subject to unlimited personal liability for the partnership's debts and obligations. In a general partnership, each partner can be held personally liable for the contracts and actions of the other partners.
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Question 1: (5 marks) Describe the shifts in the world economy over the past 20 years. What are the implications of these shifts for international businesses based in the UAE?
Global shifts in the past 20 years impact UAE-based international businesses with increased competition, market expansion, digital transformation, and diverse consumer demands.
Over the past two decades, the world economy has experienced significant shifts that have impacted international businesses. Globalization has led to increased interconnectedness and trade between countries, allowing businesses in the UAE to access new markets and consumers worldwide. The rise of emerging markets, such as China and India, has created both challenges and opportunities for UAE-based businesses, as these markets offer substantial growth potential but also heightened competition.
Technological advancements, particularly in digitalization and e-commerce, have transformed business operations and consumer behavior. UAE-based businesses need to embrace digital transformation to remain competitive and meet evolving customer expectations. Moreover, changing consumer preferences, such as increased focus on sustainability and personalized experiences, require businesses to adapt their strategies and offerings accordingly.
For international businesses based in the UAE, these shifts mean they need to be agile and proactive in navigating the global market. They must invest in technological infrastructure, innovate, and develop strategic partnerships to seize opportunities in emerging markets. Additionally, understanding and catering to diverse consumer demands, both domestically and globally, is crucial for sustained growth and success in an evolving world economy.
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question Question 1 of 2 2.5/5 E View Policies Show Attempt History Current Attempt in Progress Blue Company had the following account balances at year-end Cost of Goods Sold 561.200 Inventory $14.550. Urties Expense $29.960. Sales Revenue $120,310, Sales Discounts $1,080, and Sales Returns and Allowances 51.750. A physical count of inventory determines that merchandise inventory on hand is $12.180 They use the perpetual inventory systom (a) Your answer is correct Prepare the adjusting entry necessary asaresult of the physical count (Listoll debit entries before credit entries. Credit account title are automatically Indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account des and enter for the amounts) Question 1 of 2 < > 2.5/5 : (b) Prepare closing entries. (Ustall debit entries before and entries and account titles are automatically indented when amount entered. Do not indent manually not required. sed "No Entry for the account title and enter for the amount Account Titles and Explanation Debit Credit (To close accounts with credit balances)
(a)Adjustment Entry: Adjustment entries are journal entries that are used at the end of an accounting cycle to update the accounts of a company. The adjustment entry that Blue Company must make is to adjust the Merchandise Inventory to the correct balance.
Cost of Goods Sold is also credited as a result of the adjustment entry.Account Title Debit Credit Merchandise Inventory 2370 Cost of Goods Sold 2370(b) Closing Entries: At the end of the accounting cycle, the temporary accounts are closed. Closing entries are used to close these accounts. When closing entries are made, all temporary accounts are closed to the income summary account. Blue Company has four accounts that must be closed: Sales Revenue, Sales Discounts, Sales Returns and Allowances, and Utilities Expense. To make closing entries, we need to use the following accounts:Income Summary Sales Revenue Sales Discounts Sales Returns and Allowances Utilities Expense Account Title Debit Credit income Summary 7710 Sales Revenue 120310 Sales Discounts 1080 Sales Returns and Allowances 51750 Utilities Expense 29960 Income Summary 63480
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View Policies Current Attempt in Progress Blossom Industries collected $104,000 from customers in 2022. Of the amount collected, $24,100 was for services performed in 2021. In addition, Blossom performed services worth $39.400 in 2022, which will not be collected until 2023. Blossom Industries also paid $72.400 for expenses in 2022. Of the amount paid, $30,700 was for expenses incurred on account in 2021. In addition, Blossom incurred $43,600 of expenses in 2022, which will not be paid until 2023. (a) Compute 2022 cash-basis net income. Cash-basis net income $ (b) Compute 2022 accrual-basis net income. Accrual-basis net income $
a) The 2022 cash-basis net income is $31,600.
b) The 2022 accrual-basis net income is $38,200.
(a) To compute the 2022 cash-basis net income, we need to consider only the cash transactions that occurred in 2022. We exclude any transactions related to 2021 or future periods.
Cash collected from customers in 2022: $104,000
Cash paid for expenses in 2022: $72,400
Cash-basis net income = Cash collected - Cash paid
Cash-basis net income = $104,000 - $72,400
Cash-basis net income = $31,600
Therefore, the 2022 cash-basis net income is $31,600.
(b) To compute the 2022 accrual-basis net income, we need to consider both cash transactions and the recognition of revenue and expenses based on the accrual accounting method.
Revenue recognized in 2022:
Cash collected from customers in 2022: $104,000
Less: Amount collected for services performed in 2021: $24,100
Revenue recognized in 2022 = $104,000 - $24,100
Revenue recognized in 2022 = $79,900
Expenses recognized in 2022:
Cash paid for expenses in 2022: $72,400
Less: Amount paid for expenses incurred in 2021: $30,700
Expenses recognized in 2022 = $72,400 - $30,700
Expenses recognized in 2022 = $41,700
Accrual-basis net income = Revenue recognized - Expenses recognized
Accrual-basis net income = $79,900 - $41,700
Accrual-basis net income = $38,200
Therefore, the 2022 accrual-basis net income is $38,200.
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As discussed by one of our guest lecturers (Rough), retailers typically hate a single dominant supplier in one product area. True False
True. As discussed by one of our guest lecturers (Rough), retailers typically hate a single dominant supplier in one product area.
This is because when there is only one supplier for a product, the retailer is at the mercy of that supplier and has limited bargaining power, which can lead to unfavorable terms and conditions for the retailer.
In addition to better bargaining power, working with multiple suppliers also provides retailers with greater product diversity, as each supplier will have its own unique range of products. This allows the retailer to offer a wider range of products to its customers, which can help to attract and retain customers. Finally, by working with multiple suppliers, retailers can reduce their dependence on any one supplier and minimize the risks associated with supply chain disruptions, such as shortages or delays.
In conclusion, retailers prefer to work with multiple suppliers rather than a single dominant supplier because it provides them with better bargaining power, greater product diversity, and reduces their dependence on any one supplier.
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