Answer and Explanation:
The Journal entry is shown below:-
1. Factory Labor Dr, $55,200
To Labor Price Variance $1,200
To Factory Wages Payable $54,000
(Being factory labor is recorded)
Here we debited the factory labor as it increased the expenses and we credited the labor price variance and factory wages payable as it the factory wages payable increased the liabilities
2. Work in Process Inventory $57,040 ($55,200 ÷ $6,000 × $6,200)
To Labor Quantity Variance $1,840
To Factory Labor $55,200
(Being is work in progress is recorded)
Here we debited the work in progress inventory as it increased the assets and we credited the labor quantity variance and factory labor as the factory labor decreased the expenses
Smiley Corporation sold equipment costing with of accumulated depreciation for cash. Which of the following journal entries should be prepared?
a. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000
b. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000
c. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000
d. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000
The question is incomplete as the figures are missing. The complete question is,
Smiley Corporation sold equipment costing $72, 000 with $66, 000 of accumulated depreciation for $10, 000 cash. Which of the following journal entries should be prepared?
A. debit Cash for $10, 000, credit Equipment for $6000 and credit Gain on Sale of Equipment for $4000
B. debit Cash for $10, 000, debit Accumulated Depreciation - Equipment for $66, 000, credit Equipment for $72000 and credit Gain on Sale of Equipment for $4000
C. debit Cash for $10, 000 and credit Gain on Sale of Equipment for $10, 000
D. debit Accumulated Depreciation - Equipment for $66, 000 and credit Equipment for $66, 000
Answer:
Option B is the correct answer.
Explanation:
To calculate the gain or loss on disposal of the equipment, we first need to determine the book value of the equipment on the date of sale.
Net Book Value = Cost - Accumulated depreciation
Net Book value = 72000 - 66000 = $6000
The gain/(loss) on disposal = Sales Proceeds - Net Book value
The gain/(loss) on disposal = 10000 - 6000 = $4000 Gain
The entry to record this transaction will be,
Cash $10000 Dr
Accumulated depreciation - Equipment $66000 Dr
Equipment $72000 Cr
Gain on sale-Equipment $4000 Cr
A car dealership union negotiates a contract that dramatically increases the salaries of all salesmen. If one of the salesmen is thinking of changing careers to be a hardware salesman, his opportunity cost:___________.
a. Would not be affected
b. Of becoming a hardware salesman would decrease
c. Of becoming a hardware salesman would increase
d. None of the above
Answer:
c. Of becoming a hardware salesman would increase
Explanation:
Opportunity cost defines that when a person gets to benefit from another than he received. So, that person takes another benefit from where he gets more benefit or we can say that he will choose the best alternative.
According to the given situation, A car dealership association is negotiating a contract that significantly increases all salesmen 's wages. Now, the Opportunity cost when one of the salespersons feels that shifting the path to hardware is of becoming a hardware salesperson that would increase.
Hence, the right answer is C
Determine which of the following situations describe games and which describe decisions. In each case, indicate what specific features of the situation caused you to classify it as you did. (a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase (b) A pair of teenage girls choosing dresses for their prom (c) A college student considering what type of postgraduate education to pursue (d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year (e) A presidential candidate picking a running mate
Answer:
Situation which describes:
1. Game:
(a) A group of grocery shoppers in the dairy section, with each shopper choosing a flavor of yogurt to purchase
(Because of the attribute of each shopper choosing a flavor of yogurt.)
2. Decisions:
(b) A pair of teenage girls choosing dresses for their prom. (The prom which date and time has been fixed already)
(c) A college student considering what type of postgraduate education to pursue. (Because of decision to be educated)
(d) The New York Times and the Wall Street Journal choosing the prices for their online subscriptions this year. (Due to the various financial ability of its reader)
(e) A presidential candidate picking a running mate ( Due to the election that is upcoming)
Explanation:
Firms with high capital intensity ratios have found ways to lower this ratio permitting them to achieve a given level of growth with fewer assets and consequently less external capital. For example, just-in-time inventory systems, multiple shifts for labor, and outsourcing production are all feasible ways for firms to reduce their capital intensity ratios. True or False
Answer: True
Explanation:
The capital intensity ratio of a company
is used to measure the amount of capital that is required per dollar of revenue. The capital intensity ratio is calculated when the total assets that a company has is divided by its sales.
It should be noted that firms that has high capital intensity ratios have found ways to lower this ratio which allows them to achieve a given level of growth with fewer assets and consequently less external capital.
12.The competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making A. entails little or no strategy coordination across countries. B. usually involves cross-subsidizing the prices in those markets where there are significant country-to-country differences in the product attributes that customers are most interested in. C. involves selling a mostly standardized product worldwide, but varying a company's use of distribution channels and marketing approaches to accommodate local market conditions. D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions. E. involves having strongly differentiated product versionsfor different countries and selling them under distinctly different brand names (one for each country or group of neighboring countries) so that there will be no doubt in customers' minds that the product is more local than global.
Answer:
D. is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.
Explanation:
A think global act local is a strategic business approach or concept which is aimed at achieving a low cost, effective cost, efficiency and focused strategy theme in all the locations where the firm has its operations but nonetheless avails local managers the opportunity and ability to adjust product
specifications, distribution and marketing channels to better satisfy local consumers, as well as effectively and efficiently match local market conditions.
Hence, the competitive strategy of a firm pursuing a "think global, act local" approach to strategy-making is essentially the same in all country markets where it competes but it may nonetheless give local managers room to make minor variations where necessary to better satisfy local buyers and to better match local market conditions.
In this module, you learned about the risks or costs associated with financial goals. What are the risks or costs associated with your goal, and how can you overcome these challenges
Answer with Explanation:
My goal is to start a business totally based on a new idea with great potential to influence the lives of the people of America. For this I had worked on a startup idea for couple of years and continuously reforming it.
The biggest risks associated with this goal is funding problems, business risks, market research, innovation issues and Software designing issues.
Now these are some risks that I face but I overcome these challenges by:
Risks Solution
Funding Risk: By presenting my startup idea on a international competition by writing business proposal based on well researched market, product innovation and the financial prospect of the business. There are numerous accelerator programs operated by the state and other organizations that encourage startups and helps with numerous facilities. So I will also present my idea here to secure funding from a wider number of investors.
Business Risks: Giving special considerations to business risks and their mitigation strategies.
Innovation: The products will be innovative enough to generate handsome amount of profit and must be capable of giving tough time to its competitors.
Market Research: The best performing businesses know who their customers are and what they are desiring from them. So market research would capable of identifying my potential customers and that it must be representative of the sample taken.
Software Designing: The software design must be user friendly and must effectively resolve users issues. Furthermore, it must be continuously updated with better features and friendly functioning.
The accounts receivable turnover is computed as __________ divided by __________. sales; accounts receivable sales; average accounts receivable sales; net income accounts receivable; net income
Answer:
sales ; average accounts receivables
Explanation:
Accounts receivable turnover refers to how a business firm manage its assets. Businesses, companies uses accounts receivables to know and quantify how perfectly goods bought on credit by their customers are being paid back. It also measures how business gives credit and collects back it's debt .It is calculated as net sales divided by average accounts receivables.
Central Systems desires a weighted average cost of capital of 12.7 percent. The firm has an aftertax cost of debt of 4.8 percent and a cost of equity of 15.4 percent. What debt-equity ratio is needed for the firm to achieve its targeted weighted average cost of capital?
a. 0.37
b. 0.44
c. 0.42
d. 0.56
e. 0.34
Answer:
e. 0.34
Explanation:
Let debt be $D
Equity be $E
Total=(D+E)
WACC = Respective cost * Respective weight
12.7 = {(D*4.8)/(D+E)} + {(15.4*E)/(D+E)}
12.7*(D+E)=4.8D+15.4E
12.7D+12.7E=4.8D+15.4E
D=(15.4-12.7)E /(12.7-4.8)
D = 2.7E / 7.9
D = 0.0341772
D = 0.34 E
Hence, debt-equity ratio=debt/equity
=0.34
Ornaments, Inc., is an all-equity firm with a total market value of $597,000 and 26,200 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $84,900 if the economy is normal. If there is a recession, EBIT will be 20 percent lower, and if there is a boom, EBIT will be 30 percent higher. The tax rate is 34 percent. What is the EPS in a recession
Answer:
The EPS in a recession is $1.71.
Explanation:
Earnings per share (EPS) = Earnings Attributable to holders of Common Stocks ÷ Weighted Average Number of Common Stocks
Earnings Attributable to holders of Common Stocks = ($84,900 - ($84,900 × 0.34)) × 80 %
= $44,827.20
Weighted Average Number of Common Stocks = 26,200 shares
Earnings per share (EPS) = $44,827.20 ÷ 26,200 shares
= $1.71
The Fama-French 3 factor model contains... Group of answer choices market, momentum, and liquidity risk factors none of the answers market, size, and momentum risk factors market, size, and volatility risk factors
Complete Question:
The Fama-French 3 factor model contains
Group of answer choices
A. Market, Momentum and Liquidity Risk Factors
B. None of the answers
C. Market, Size and Momentum risk factors
D. Market, Size and Volatility Risk Factors
Answer:
Hence option is none of these.
Explanation:
The Fama French 3 Model contains following three factors:
Size of FirmsBook-to-Market Values which is Value RiskExcess Return on the Market which is Market RiskIt doesn't include Liquidity risk and Momentum risk factors.
Hence none of the option is correct so we will choose "None of the answers".
Stellar Corporation has a cumulative temporary difference related to depreciation of $542,000 at December 31, 2017. This difference will reverse as follows: 2018, $37,000; 2019, $225,000; and 2020, $280,000. Enacted tax rates are 35% for 2018 and 2019, and 40% for 2020. Compute the amount Stellar should report as a deferred tax liability at December 31, 2017. Deferred tax liability at December 31, 2017
Answer:
$203,700
Explanation:
2018 2019 2020
Temporary difference $37,000 $225,000 $280,000
Tax rate 35% 35% 40%
Deferred tax liability $12,950 $78,750 $112,000
Deferred tax liability to be reported at December 31, 2017 = $12,950 + $78,750 + $112,000 = $203,700
Jacob Corcoran bought 10,000 shares of Grebe Corporation stock two years ago for $24,000. Last year, Jacob received a nontaxable stock dividend of 2,000 shares in Grebe Corporation. In the current tax year, Jacob sold all of the stock received as a dividend for $18,000.
Required:
a. Complete the letter to Jacob describing the tax consequences of the stock sale.
b. Prepare a memo for the tax research file describing the tax consequences of the stock sale.
c.
Answer:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
Explanation:
Jacob purchased 10000 shares form Grebe corporation two years ago for $24000
last year Jacob received a non taxable stock dividend of 2000 shares from Grebe corporation
In the current year tax year Jacob sold all stock received as dividend that's 2000 shares for $18000
The gain of the sale of 2000 shares can be calculated by subtracting the basis in the shares from the cost price. the cost of shares = ( $24000 / 12000 ) = $2 per share
profit made from the sales of 2000 shares is calculated as follows ; selling price ( $18000 ) - cost price of 2000 shares ( $2 * 2000) , the profit is $14000 and it is in the long term because the original shares bought has been held for at least 1 year
On January 1, 2021, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Required:Assuming the market interest rate on the issue date is 8%, the bonds will issue at $320,000. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
Answer:
Journal entries are given below
Explanation:
Entry for the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021, are prepared as follows
January 01, 2021 (Splash City issues $320,000 of 8% bonds)
Debit Credit
Cash 320,000
Bonds payable 320,000
June 30, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
December 31, 2021 (Interest paid)
Debit Credit
Interest expense $12,800
Cash $12,800
Working
Interest expense = $320,000 x 8% x 6/12
Interest expense = $12,800
Kaskin, Inc., stock has a beta of 1.2 and Quinn, Inc., stock has a beta of 0.6. Which of the following statements is most accurate? The equilibrium expected rate of return is higher for Kaskin than for Quinn. The stock of Kaskin has more total risk than Quinn. The stock of Quinn has more systematic risk than that of Kaskin.
Answer:
The equilibrium expected rate of return is higher for Kaskin than for Quinn.
Explanation:
Option A “The equilibrium expected rate of return is higher for Kaskin than for Quinn” is more accurate because the expected return is calculated by multiplying the risk premium with beta value and then adding with risk-free return. However, if the beta value is high, then the magnitude after multiplying with the risk premium will be high. Moreover, is magnitude will be added to risk-free return to find the expected return. Thus, it can be seen that Kaskin has high beta 1.2 as compared to Quinn’s beta value 0.6. So, the Kaskin has a higher expected return.
Which of the following is one of the two fundamental issues that the recommendations of the 1947 Hutchins Commission on social responsibility in journalism were based on?a. Society's welfare is paramount. b. Morality should be a business practice. c. Corporate responsibility is essential. d. The golden rule should be written in stone.
Answer:
a. Society's welfare is paramount.
Explanation:
A commission on the freedom of press also known as "The Hutchins Commission" was formed in the United States of America (USA) during the World War II (WWII) by Robert Maynard Hutchins.
In 1947 after deliberating on the issues of press for four (4) years, the Hutchins Commission concluded that society's welfare is paramount, this is one of the two fundamental issues that the recommendations of the 1947 Hutchins Commission on social responsibility in journalism is based on. The commission stated that the development and stability of a society is influenced by the operations of the press and as such it is very important that the mass media (press) is socially responsible.
Some of the guidelines or recommendations made by the Hutchins Commission for the press are;
1. Present meaningful, reliable and accurate news to the general public; not opinions.
2. Present an overall view of what was known about society.
3. Avail the citizens an opportunity for constructive criticism and exchange of comment about the government.
Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Compute the division's return on investment:
Answer:
14.7%
Explanation:
The computation of return on investment is shown below:
Return on Investment = Net Income ÷ Average total assets × 100
where,
Net Income is
= Sales - Cost of goods sold - Operating expense
= $4,525,000 - $2,550,000 - $1,372,000
= $603,000
And,
Average total assets = $4,100,000
So,
Return on Investment is
= $603,000 ÷ $4,100,000 × 100
= 14.7%
Tom Company reports the following data.
Sales $385,187
Variable costs 200,887
Fixed costs 87,300
Required:
Determine Tom Company's operating leverage. Round your answer to one decimal place.
Answer: 1.9
Explanation:
The Operating Leverage is calculated by;
Operating leverage = Contribution margin / Operating income
Contribution Margin
= Sales - Variable Costs
= 385,187 - 200,887
= $184,300
Operating Income
= Contribution Margin - Fixed Costs
= 184,300 - 87,300
= $97,000
Operating Leverage = 184,300/ 97,000
= 1.9
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. Thomas's fastest-moving inventory item has a demand of 5,900 units per year. The cost of each unit is $102, and the inventory carrying cost is $9 per unit per year. The average ordering cost is $29 per order. It takes about 5 days for an order to arrive, and the demand for 1 week is 118 units. (This is a corporate operation, and there are 250 working days per year).
Required:
a. What is the EOQ?
b. What is the average inventory if the EOQ is used?
c. What is the optimal number of orders per year?
d. What is the optimal number of days in between any two orders?
e. What is the annual cost of ordering and holding inventory?
f. What is the total annual inventory cost, including cost of the 6,000 units?
Answer: Please find answers below
Explanation:
(a) Economic order quantity EOQ = [tex]\sqrt{2 X Annual Demand X Ordering Cost) / Carrying Cost)}[/tex]
= [tex]\sqrt{2 X 5,900 X 29 / 9 }[/tex] = [tex]\sqrt{38,022.222}[/tex]
= 194.99 units
(b) Average number of units = Economic order quantity / 2
= 194.99 / 2
= 97.496 units
(c) Optimal number of orders = Annual Demand / Economic order quantity
= 5,900units / 194.99 units =30.26
(d) Optimal number of days between two orders = Number of working days / Optimal number of orders
= 250 days / 30.26
= 8.26
Total ordering cost = Cost per order X Number of orders
= $29 X 30.26
= $ 877.54
Total holding cost = Average inventory X carrying cost per unit
= 194.99 /2 X $9
= $877.455
(e) Annual cost of ordering and holding inventorY =Total ordering cost + Total carrying cost
= $ 877.54 + $877.455
= $ 1,754.995 ≈ $1,755
(f) Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 5900 units at $102 per unit
= $ 877.54 + $877.455 + (5,900 x 102) = $1754.995 +601,800= $603,554.995≈$603,555
Total annual inventory cost =Total ordering cost +Total holding cost + Actual cost of 6000 units at $102 per unit
= $ 877.54 + $877.455 + (6000 x 102) = $1754.995 +612,000= $613,754.995≈$613,755
During the year, Bramble Corp. made an entry to write off a $31400 uncollectible account. Before this entry was made, the balance in accounts receivable was $413000 and the balance in the allowance account was $34500. The accounts receivable amount expected to be collected after the write-off entry was
Answer:
The accounts receivable amount expected to be collected after the write-off entry is $378,500
Explanation:
Allowance for bad debt = $34,500
Bad debt written off = $31,400
Credit balance in allowance for bad debts = Allowance for bad debt - Bad debt written off
= $34,500 - $31,400
= $3,100
The balance in receivables account = ($413,000 - $31,400) - ($34,500 - $31,400)
= $381,600 - $3,100
= $378,500
It is March 31, 2014. What is the latest reported number of E-Bay shares beneficially owned by the company’s CEO? Please provide your answer without comma separator or decimal (Ex: 23456326563)
Answer: 2663844
Explanation:
According to page 22 of eBay's March 2014 Definitive Proxy statement on the SEC's website, the President and CEO Mr John J. Donahoe, beneficially owned 2,663,844 shares in the company. This includes, 2,083,628 shares that he can acquire pursuant to some Options and 35,306 in Restricted stock units.
A company plans to invest X at the beginning of each month in a zero-coupon bond in order to accumulate 100,000 at the end of six months. The price of each bond as a percentage of redemption value is given in the following chart:1 2 3 4 5 6 ; 99% 98% 97% 96% 95% 94%; Calculate X given that the bond prices will not change during the six-month period.
Answer:
x = $16,078.46
Explanation:
$100,000 = 1.0101x + 1.0204x + 1.0309x + 1.0417x + 1.0526x + 1.0638x
$100,000 = 6.2195x
x = $100,000 / 6.2195 = $16,078.46
month investment value at end of month 6
1 $16,078.46 $17,104.74
2 $16,078.46 $16,924.68
3 $16,078.46 $16,748.39
4 $16,078.46 $16,575.73
5 $16,078.46 $16,406.59
6 $16,078.46 $16,240.87
total $96,470.76 $100,001*
*the extra $1 is due to rounding errors.
Janitor Supply produces an industrial cleaning powder that requires 31 grams of material at $0.30 per gram and 0.40 direct labor hours at $10.00 per hour. Overhead is applied at the rate of $16 per direct labor hour. What is the total standard cost for one unit of product that would appear on a standard cost card
Answer:
Total standard cost per unit will be $19.7
Explanation:
The standard cost card of the product will be,
$
Material (0.3 * 31) 9.3
Direct Labor (0.4 * 10) 4
Overheads (0.4 * 16) 6.4
Total cost per unit 19.7
Thus, the standard cost per unit will be $19.7
A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month, 2200 gallons of direct materials were purchased for $16720. The direct materials price variance for last month was
Answer:
$880 favorable
Explanation:
The computation of direct materials price variance for last month is shown below:-
Direct material price variance = Actual quantity × (Standard price - Actual price)
= 2,200 × ($8 - ($16,720 ÷ 2,200)
= 2,200 × ($8 - 7.6)
= 2,200 × $0.4
= $880 Favorable
Therefore for computing the direct materials price variance for last month we simply applied the above formula.
To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in accrued expenses is added to operating expenses other than depreciation.
a. True
b. False
Answer:
True
Explanation:
To determine cash payments under direct method the decrease in accrued expenses is added to the operating expenses payable . Accrued expense mean expenses incurred but not yet paid. A decrease in accrued expenses would suggest that accrued expenses have been paid therefore there has been an outflow of cash which will be added to cash paid for operating expenses.
Morgan Company issues 10%, 20-year bonds with a par value of $720,000 that pay interest semiannually. The current market rate is 9%. The amount paid to the bondholders for each semiannual interest payment is:
Answer:
$36,000
Explanation:
Calculation for the amount to be paid to the bondholders for each semiannual interest payment
Using this formula
Semiannual interest payment = Face value Amount*Interest Rate*Time
Let plug in the formula
Semiannual interest payment = $720,000*0.10*0.50
Semiannual interest payment = $36,000
The amount paid to the bondholders for each semiannual interest payment is $36,000
Which of the following is a true statement about the limitation on business interest deductions? This limitation is not imposed on businesses with average annual gross receipts of $25 million of less for the prior three taxable years. A. Interest disallowed by this limitation is carried back three years and then forward five years B. The limitation is calculated as a percentage of the taxpayers total taxable income C. This limitation is not imposed on businesses with average annual gross receipts of $26 million or less for the prior three taxable years D. All of the choices are false E. All of the choices are true
Answer:
Limitation on Business Interest Deductions:
B. The limitation is calculated as a percentage of the taxpayers total taxable income
Explanation:
30% (or 50% for years 2019 and 2020, as amended by the CARES Act) of the adjusted taxable income of a business is the limit of business interest expense that is allowed by the IRS. The excess after this limitation may be carried forward by the tax paying organization to future tax years indefinitely until the interest expense is completely applied.
Following the CARES Act, "the business interest expense deduction limitation does not apply to certain small businesses whose gross receipts are $26 million or less, electing real property trades or businesses, electing farming businesses, and certain regulated public utilities. The $26 million gross receipts threshold, which applies for the 2020 tax year, is adjusted annually for inflation."
Which of the following is an example of an oligopolistic market with a standardized product?
A) The market for breakfast cereal.
B) The market for aluminum.
C) The market for jewelry.
D) The market for automobiles.
Answer:
B) The market for aluminum.
Explanation:
An oligopoly is a market form in which the market or industry is dominated by a small group of large sellers. Oligopolies can result from various forms of collusion that reduce market competition which then majorly leads to higher prices for consumers. They have their own market structure.
Oligopolistic market with standardised product is an homogeneous oligopoly that is an oligopoly in which firm produce a standardised product. And a good example of that is the Aluminum market.
Suppose Income Summary received a debit of $75,000 and a credit of $100,000. The net income or net loss for the period must have been:
Answer: Net income of $25000
Explanation:
Suppose Income Summary received a debit of $75,000 and a credit of $100,000, there will be a net income of $25000.
This is because we've a credit of $100,000 and a debit of $75,000 and since the credit is higher than the debit, it shows that there will be a net income.
One of the necessary conditions for a contestable market is that new firms entering the market have a cost advantage over the existing firms.
A. True
B. False
Answer: False
Explanation:
A contestable market is a market whereby there is entry and exit for the companies and such companies usually have low sunk costs. Such companies have access to same technology and skills.
Therefore, the conditions for a contestable market that new firms entering the market have a cost advantage over the existing firms is not true.
A retired customer has an existing stock portfolio held in a cash account. He has heard that "leveraging" his portfolio can increase his return. The portfolio holds blue chip stocks that pay current dividends. He wants to transfer the positions to a margin account and use them as collateral to buy more stocks of the same blue chip companies. Which statement is TRUE
Answer: C. This is not an appropriate strategy because the customer's income will decline
Explanation:
A. The options for the question are:
This is an appropriate strategy that will increase the customer's income
B. This is not an appropriate strategy because the customer's tax liability will increase if the securities appreciate and are sold
C. This is not an appropriate strategy because the customer's income will decline
D. This is an appropriate strategy because the customer has the potential for larger capital gains
From the information that have been provided in the question, we can see that the customer needs income but based on the information that have been provided in the question, the interest that will be charged will eat up the dividend paid by the the stock.
Therefore, this is not an appropriate strategy because the customer's income will decline.
