Answer:
True
.......
When approaching a multiple-choice question, it's essential to first eliminate answer choices that are obviously incorrect or "silly." Hence th statement is true .
What is MCQ ?Doing so will increase your chances of selecting the correct answer from the remaining options.
To begin, carefully read the question stem and identify any clues or keywords that might help you narrow down the possible answers. Then, review each answer choice and eliminate any that are blatantly wrong, based on your knowledge of the subject matter or common sense.
For example, if you are taking a math test and the question asks you to solve for x in the equation 2x + 5 = 13, you can quickly eliminate answer choices such as -5 or 50, which are clearly impossible solutions.
It's important to note that eliminating "silly" answer choices is just the first step in the process of solving a multiple-choice question. After you've narrowed down the possibilities, you'll need to carefully consider each remaining option and choose the one that best fits the question stem.
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Mid-Town Copy Service processes 2,100,000 photocopies per month at its mid-town service center. Approximately 50 percent of the photocopies require collating. Collating is currently performed by high school and college students who are paid $8 per hour. Each student collates an average of 5,000 copies per hour. Management is contemplating the lease of an automatic collating machine that has a monthly capacity of 6,000,000 photocopies, with lease and operating costs totaling $1,550, plus $0.05 per 1,000 units collated.(a) Determine the total costs of collating 500,000 and 1,500,000 per month:1. With student help.2. With the collating machine.(b) Determine the monthly volume at which the automatic process becomes preferable to the manual process.
Answer:
Mid-Town Copy Service
a. The total costs of collating 500,000 and 1,500,000 per month are:
500,000 1,500,000
1. With student help $800 $2,400
2. With the collating machine $1,575 $1,625
b. The monthly volume at which automatic process becomes preferable to the manual process is:
= 1,050,000 photocopies.
Explanation:
a) Data and Calculations:
Monthly photocopies processed per month = 2,100,000
Photocopies requiring collation = 1,050,000 (50% * 2,100,000)
Cost of collating per hour = $8
Average number of copies collated by a student per hour = 5,000
Total cost of manual collating copies = $8 * 1,050,000/5,000 = $1,680
Lease cost of automatic collating machine = $1,550 + $0.05 per 1,000 units collated
The total costs of collating 500,000 and 1,500,000 per month:
500,000 1,500,000
1. With student help $800 $2,400
($8 * 500,000/5,000) ($8 * 1,500,000/5,000)
2. With the collating machine $1,575 $1,625
($1,550 + $0.05* 500,000/1,000) ($1,550 + $0.05* 1,500,000/1,000)
b. The monthly volume at which automatic process becomes preferable to the manual process is 1,050,000.
At this volume, costs are:
Manual Process = $1,680 ($8 * 1,050,000/5,000)
Automatic Process = $1,603 ($1,550 + $0.05* 1,050,000/1,000)
Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. The Bureau of Labor Statistics classifies Allison as: unemployed. underemployed. a marginally attached worker. a discouraged worker.
Answer:
underemployed
Explanation:
From the question we are informed about Suppose that Allison has an accounting degree, but she lost her job two months ago when her company merged with another firm. Allison hasn't been able to find another accounting job, so she has taken a part-time job as a sales clerk at a clothing store. The Bureau of Labor Statistics classifies Allison as underemployed. Underemployment as regards Bureau of Labor Statistics can be regarded as one that measure employment and labor utilization in a particular economy which looks the way and how well the labor force is being utilized as regards
experience, skills,l as well as availability to work. People that falls under the classification of underemployed can include high skilled workers that are working in low paying or managing low skill jobs as well as part-time workers even though they who would prefer to work full-time. Unlike unemployment whereby the person is working though not at their full capability.
Suppose that Canada can produce 15units of timber or 3 units of grain. Suppose that Mexico can produce 6 units of timber or 2 units of grain. Which of the following is CORRECT?
a. Canada has a comparative advantage in grain production.
b. Mexico has a comparative advantage in grain production.
c. The countries would find trade mutually beneficial at a trading ratio of 1 grain for 2 timber.
d. Mexico has an absolute advantage in timber production.
Answer: B. Mexico has a comparative advantage in grain production.
Explanation:
Comparative advantage simply means when an economy can produce a good at a lower opportunity cost than another economy.
From the information given, since Canada can produce 15units of timber or 3 units of grain. Therefore, 1 grain = 15/3 = 5 timber
On the other hand, Mexico can produce 6 units of timber or 2 units of grain. Therefore, 1 grain = 6/2 = 3 timber.
Therefore, Mexico haa a comparative advantage in grain based on the above.
Based on the connecting letter report, salaries of which college majors are significantly different?
A. Social science and special education.
B. Science and music.
C. Language and music.
D. Social science and music.
Barry Mary
126 114
110 118
138 114
142 111
146 129
136 119
94 97
103 104
140 127
152 133
108 103
97 108
Answer:
C. Language and Music.
Explanation:
The letter report has listed salaries of various employees in different departments. The college majors have different salaries who teach different subjects. The salary for social science staff is higher than the language teaching staff. The most significantly different salaries are for language and music college majors.
The salaries that are significantly different from the given report are C. Language and music.
Salaries of the various subjects. Language college major appear to pay the least amount of salary. Music college major is one of the highest paying.For this reason, the difference between the salaries of music majors and language majors is the most significant.
In conclusion, option C is correct.
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While under contract to play professional basketball for the Philadelphia 76ers, Billy Cunningham, an outstanding player, negotiated a three-year contract with the Carolina Cougars, another professional basketball team. The contract with the Cougars was to begin at the expiration of the contract with the 76ers. In addition to a signing bonus of $125,000, Cunningham was to receive under the new contract a salary of $100,000 for the first year, $110,000 for the second, and $120,000 for the third. The contract also stated that Cunningham "had special, exceptional and unique knowledge, skill and ability as a basketball player" and that Cunningham therefore agreed the Cougars could enjoin him from playing basketball for any other team for the term of the contract. In addition, the contract contained a clause prohibiting its assignment to another club without Cunningham’s consent. In 1971, the ownership of the Cougars changed, and Cunningham’s contract was assigned to Munchak Corporation, the new owners, without his consent. When Cunningham refused to play for the Cougars, Munchak Corporation sought to enjoin his playing for any other team. Cunningham asserts that his contract was not assignable. Was the contract assignable? Explain.
Answer:
Billy Cunningham and the Cougars
The contract was not assignable to another club.
But, the contract (assets and liabilities) can be inherited by a successor entity using the same club, the Cougars.
Explanation:
The contract was not assigned to another club, despite the change of ownership of the Cougars. Interestingly, the contract between Cunningham and Carolina Cougars was inheritable with the change of ownership of the Cougar Club from the formers owners, Carolina Cougars, to the new owners, Munchak Corporation. The clause prohibiting the contract's assignment to another club without Cunningham's consent was not violated.
Kiley Corporation had these transactions during 2022. Analyze the transactions and indicate whether each transaction is an operating activity, investing activity, financing activity, or noncash investing and financing activity.
a. Purchased a machine for $30,000, giving a long-term note in exchange.
b. Issued $50,000 par value common stock for cash.
c. Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000.
d. Declared and paid a cash dividend of $13,000.
Answer:
A. Noncash investing and financing activities
B. Financing activities
C. Noncash investing and financing activities
D. Financing activities
Explanation:
To Analyze the transactions and indicate whether each transaction is AN OPERATING ACTIVITY, INVESTING ACTIVITY, FINANCING ACTIVITY, OR NONCASH INVESTING AND FINANCING ACTIVITY
A. Based on the information given the transaction is a NONCASH INVESTING AND FINANCING ACTIVITIES
B. Based on the information given the transaction is a FINANCING ACTIVITIES
C. Based on the information given the transaction is a NONCASH INVESTING AND FINANCING ACTIVITIES
D.Based on the information given the transaction is a FINANCING ACTIVITIES
a. Purchased a machine for $30,000, giving a long-term note in exchange, this transaction is an investing activity because it involves the acquisition of a long-term asset (machine) in exchange for a long-term note.
b. Issued $50,000 par value common stock for cash, this transaction is a financing activity because it involves the issuance of common stock in exchange for cash.
c. Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000,this transaction is a non-cash investing and financing activity because it involves the conversion of bonds into common stock.
d. Declared and paid a cash dividend of $13,000, This transaction is a financing activity because it involves the distribution of cash to shareholders as a dividend.
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Assume that Jones Company made a payment on a mortgage. It included $100 of principal and $150 of interest. What would the journal entry be to record the payment?
Answer:
the journal entry be to record the payment
Debit : Interest expense $150
Debit : Mortgage Payable $100
Credit : Cash $250
Explanation:
When a payment for mortgage is made, we recognize the interest expense that accrues and also derecognize the part of capital repayment made for the mortgage. That means Mortgage Payable decreases, Interest expense increases and Cash account decreases with the to total of interest and principle.
The purpose of managerial accounting is to provide useful information to management and other internal decision makers. It does this by collecting, managing, and reporting both monetary and nonmonetary information in a manner useful to internal users. Major characteristics of managerial accounting include (1) focus on internal decision makers, (2) emphasis on planning and control, (3) flexibility, (4) timeliness, (5) reliance on forecasts and estimates, (6) focus on segments and projects, and (7) reporting both monetary and nonmonetary information. Ethics are beliefs that distinguish right from wrong. Ethics can be important in reducing fraud in business operations.
The purposes of managerial accounting are to provide useful information to aid in: __________
a. Renewing pest activities,
b. Determining costs of products and services.
c. Determining costs of employee wages and "lanes
d. Comparing actual to planned
Answer:
d. Comparing actual to planned
Explanation:
The purpose of managerial accounting are to provide useful information to aid managers. It is important to remember that managerial accounting is for internal use only whilst financial accounting is for external use (reporting purposes).
Since one of the characteristics of managerial accounting is planning and control, this is made possible by comparing actual to planned.
The San Pedro Company forecasts that total overhead for the current year will be $10,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $8,000,000 and the actual machine hours are 100,000 hours. If the company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate
Answer:
the overhead rate is $50 per machine hour
Explanation:
The computation of the overhead rate is shown below:
Predetermined overhead rate
= Estimated total Overhead ÷ Estimated total machine hour
= $10,000,000 ÷ 200,000 hours
= $50 per machine hour
hence, the overhead rate is $50 per machine hour
The same should be considered and relevant
Materials Variances Assume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 2 ounces of material for each pair of lenses. The standard cost per ounce of material is $16.25. During July, the Santa Clara location produced 5,200 pairs of sunglasses and used 9,800 ounces of materials. The cost of the materials during July was $17.00 per ounce, and there were no beginning or ending inventories. Required a. Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses.
Answer:
Direct material flexible budget= $159,250
Explanation:
Giving the following information:
The standard cost per ounce of material is $16.25.
Actual quantity= 9,800 ounces
The flexible budget employs the standard cost for the actual quantity:
Direct material flexible budget= 16.25*9,800
Direct material flexible budget= $159,250
At the end of January, the unadjusted trial balance of Windsor, Inc. included the following accounts: DEBIT CREDIT Sales (80% of this is credit sales) $500,000 Accounts Receivable $340,000 Allowance for Doubtful Accounts $800 Answer the following 2 questions: 1) Windsor uses the balance sheet approach in estimating uncollectible accounts expense, and aging the accounts receivable indicates the estimated uncollectible portion to be $7,400. What is the amount of uncollectible accounts expense recognized in Windsor's income statement for January
Answer:
$6,600
Explanation:
Calculation to determine What is the amount of uncollectible accounts expense recognized in Windsor's income statement for January
Using this formula
Uncollectible accounts expense=estimated uncollectible portion-Allowance for Doubtful Accounts
Let plug in the formula
Uncollectible accounts expense=$7400-$800
Uncollectible accounts expense=$6,600
Therefore the amount of uncollectible accounts expense recognized in Windsor's income statement for January is $6,600
Kingston Co. uses the percentage-of-receivables basis to record bad debt expense. It estimates that 1% of accounts receivable will become uncollectible. Accounts receivable are $420,000 at the end of the year, and the allowance for doubtful accounts has a credit balance of $1,500. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (b) If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500, determine the amount to be reported for bad debt expense
Answer:
a. Dr Bad Debts Expense $2,700
Cr Allowance for doubtful accounts $2,700
b. $5000
Explanation:
(a) Prepare the adjusting journal entry to record bad debt expense for the year.
Debit Bad Debts Expense [($420,000 x 1%) – $1,500] $2,700
Credit Allowance for doubtful accounts $2,700
(b) If the allowance for doubtful accounts had a debit balance of $800 instead of a credit balance of $1,500, determine the amount to be reported for bad debt expense
Bad debt expense = $4200 + $800 = $5000
Characteristics of entertaining media messages according to Bosshart and Marconi include psychological relaxation, stimulation, fun, challenges, dialogue, and joy.
a. True
b. False
Answer:
FALSE
Explanation:
Natasha and Link have been married for 2 years. They live in North Carolina and are about to make an offer on their first home. Their goal is to own the property so that if either Natasha or Link were to die, the surviving spouse would own the property outright. They also want to keep things private and avoid probate. How should they title their new home?
A. Link should own the house fee simple and name Natasha as his beneficiary.
B. Tenancy in common is the best way to title the property because it meets all their objectives.
C. They should title the home as JTWROS as a way to accomplish their goals.
D. Because they live in North Carolina, they should title the home as community property.
Answer:
Natasha and LInk
Based on the spouses goal to own the property so that if either Natasha or LInk were to die, the surviving spouse would own the property outright, keeping things private and avoid probate, they should title their new home as:
C. They should title the home as JTWROS as a way to accomplish their goals.
Explanation:
The arrangement that meets their goals is Joint tenancy with rights of survivorship (JTWROS) which affords survivorship rights to either Natasha or Link in the event of the death of either spouse. In other words, JTWROS allows either Natasha or Link to automatically own the property without publicity or probate. This arrangement will meet all their arrangements, unlike tenancy in common. Moreover, there is no community property provision in North Carolina where they live. Lastly, naming Natasha presupposes that Link would die first. This does not meet their expectations.
Assume the risk-free rate is 4%. You are a financial advisor, and must choose one of the funds below to recommend to each of your clients. Whichever fund you recommend, your clients will then combine it with risk-free borrowing and lending depending on their desired level of risk.
Expected Return Volatility
Fund A 10% 10%
Fund B 15% 22%
Fund C 6% 2%
Required:
a. Which fund would you recommend to a client seeking the highest possible expected return with a maximum volatility of 22%?
b. Which fund would you recommend to a client seeking the highest possible expected return with a maximum volatility of 22%?
c. Which fund would your recommend without knowing your clients risk preference?
Answer:
Following are the solution to the given point.
Explanation:
Calculate each fund's Sharpe ratio. It Fund is the best danger reward with the highest Sharpe ratio.
[tex]\text{Sharpe Ratio} = \frac{\text{(Fund return - \text{risk free return)}}}{Volatility}\\\\\to Fund A= \frac{(10\%-4\%)}{10\%} = 0.6\\\\\to Fund B= \frac{(15\%-4\%)}{22\%} = 0.5\\\\\to Fund C = \frac{(6\%-4\%)}{2\%}=1.0\\\\[/tex]
Fund C consequently offers the best risk-benefit. and without understanding client risk preference, we will advise Fund C for any clients. If a client wants to have a 22 percent minimum volatility, we'll nevertheless propose that Fund C instead of Fund B is available, because an investor can take risk-free rates to the degree that the total portfolio volatility stands at 22 percent and deposit it in Fund C.
Commercial Services.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales $3,000,000
Net operating income $150,000
Average operating assets $750,000
Required:
Consider each question below independently. Carry out all computations to two decimal places.
1. Compute the company’s return on investment (ROI).
2. The entrepreneur who founded the company is convinced that sales will increase next year by 50% and that net operating income will increase by 200%, with no increase in average operating assets. What would be the company's ROI?
3. The chief financial officer of the company believes a more realistic scenario would be a $1,000,000 increase in sales, requiring a $250.000 increase in average operating assets, with a resulting $200,000 increase in net operating income. What would be the company’s ROI in this scenario?
Answer:
1. ROI = Margin * Turnover
Margin = Net operating income / Sales
= 150,000 / 3,000,000
= 5%
Turnover = Sales / Average operating assets
= 3,000,000 / 750,000
= 4 times
ROI = 5% * 4
= 20%
2. Sales will increase by 50% and NOI will increase by 200%.
Margin = (150,000 * (1 + 200%)) / (3,000,000 * ( 1 + 50%))
= 10%
Turnover = (3,000,000 * ( 1 + 50%)) / 750,000
= 6
ROI = 10% * 6
= 60%
3. Sales will increase by $1,000,000. Average operating assets by $250,000 and NOI will increase by $200,000
Margin = (150,000 + 200,000) / (3,000,000 + 1,000,000)
= 8.75%
Turnover = (3,000,000 + 1,000,000) / (750,000 + 250,000)
= 4
ROI = 8.75% * 4
= 35%
Identify the correct statement. Select one: a. Debt increases when the budget deficit decreases. b. A budget deficit is a stock variable, while debt is a flow variable. c. A budget deficit is a flow variable, while debt is a stock variable. d. A budget deficit and debt are both stock variables. e. The budget deficit decreases when aggregate demand decreases.
Answer:
c
Explanation:
A flow variable is a variable that is measured over a period in time
A stock variable is a variable that is measured at a point in time.
Budget deficit occurs when government spending exceeds income of the government.
Debt is the total amount owed by an entity
Budget deficit is a flow variable because it increases as debt increases Debt is measured at a point in time. It is a stock variable
When budget deficit increases, debt increases. This is because a deficit would need to be funded by additional borrowing
Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not included the conversation feature, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds.
Answer: Dr Cash $3,960,000
Dr Discount on bonds payable $40,000
Cr Bonds payable $4,000,000
Explanation:
The journal entry to record the issuance of the bonds will be prepared as follows:
Dr Cash = 4,000,000 × 99% = $3,960,000
Dr Discount on bonds payable = $40,000
Cr Bonds payable = $4,000,000
(To record bond issued on discount)
A company pays its employees $2,900 each Friday, which amounts to $580 per day for the five-day workweek that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is:
Answer:
$2,320
Explanation:
Calculation to determine what amount of salaries earned but unpaid at the end of the accounting period is:
Ending salaries earned but unpaid=$2,900-$580
Ending salaries earned but unpaid=$2,320
($2,900-580)
Therefore the amount of salaries earned but unpaid at the end of the accounting period is: $2,320
Cullumber Corporation has announced that its net income for the year ended June 30, 2017, was $1,353,412. The company had EBITDA of $4,948,000, and its depreciation and amortization expense was equal to $1,128,000. The company's average tax rate is 34 percent. What was its interest expense
Answer:
See below
Explanation:
Net income = $1,353,412
Tax rate is 34% hence the company's EBT amount is calculated as
EBT = $1,353,412 / 0.66 = $2,050,624.24
Add back Depreciation and amortization to the EBT
= $2,050,624.24 + $1,128,000
= $3,178,624.24
The difference between the above and EBITDA amount will be the interest expense for the year
= $4,948,000 - $3,178,624.24
= $1,769,375.76
Therefore, the interest expense is $1,769,375.76
Angelina's made two announcements concerning its common stock today. First, the company announced that its next annual dividend has been set at $2.16 a share. Secondly, the company announced that all future dividends will increase by 4% annually. What is the maximum amount you should pay to purchase a share of Angelina's stock if your goal is to earn a 10% rate of return?
A. $21.60
B. $22.46
C. $27.44
D. $34.62
E. $36.00
During 2004, Thor Lab supplied hospitals with a comprehensive diagnostic kit for $120. At a volume of 80,000 kits, Thor had fixed costs of $1,000,000 and a profit before income taxes of $200,000. Due to an adverse legal decision, Thor’s 2005 liability insurance increased by $1,200,000 over 2004. Assuming the volume and other costs are unchanged, what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
a. $120.00
b. $135.00
c. $150.00
d. $240.00
Answer:
d. $240.00
Explanation:
Calculation to determine what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes?
2004 CM% = 12.5% ($15/$120)
2005 CM = $2,400,000 ($1,000,000 + $200,000)
2005 CM per unit = $2,400,000/80,000 units
2005 CM per unit= $30 CM per unit;
2005 selling price per unit = $30/.125
2005 selling price per unit= $240
Therefore what should the 2005 price be if Thor is to make the same $200,000 profit before income taxes is $240
Wally owns 200 acres of land.Wally offers to sell the land to Robert for $1,500 per acre.Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre.Wally agrees to sell but does not identify which 40 acres.Later,Wally refuses to sell any land to Robert.What is the result?
A) Robert wins; this is an enforceable contract with complete and definite terms.
B) Robert wins; the UCC will decide which 40 acres are to be sold.
C) Wally wins; the original offer was not intended to be an offer but merely an invitation to negotiate.
D) Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.
Answer:
D) Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold.
Explanation:
Since in the given situation, wally agrees to sell but here the identification of the land is not mentioned i.e. 40 acres and at the later time the wally refused to sold any land so here wally should wins as the agreement is not definite which type of the land should be sold so it becomes the agreement void
Hence, the correct option is d.
The Keller's discovered that they could reduce their mortgage interest rate from 10% to 4%. The value of homes in their neighborhood has been increasing at the rate of 5% annually. If the Keller's were to refinance their house with $3,000 in closing costs added to their current mortgage balance ($277,000) over a period of time which coincides with their chosen retirement age in 20 years, what would be their new monthly payment including principal and interest
Answer:
The Keller's
Their new monthly payment including principal and interest is:
= $1,817.94
Explanation:
a) Data and Calculations:
Current mortgage balance = $277,000
Closing costs for refinancing 3,000
Total mortgage balance = $300,000
Mortgage interest rate changed from 10% to 4% upon refinancing
Loan Amount 300000
Loan Term 20 years 0 months
Interest Rate 4
Compound Monthly (APR)
Pay Back Every Month
Results:
Payment Every Month $1,817.94
Total of 240 Payments $436,305.84
Total Interest $136,305.84
quản trị thương mại là gì?
Auto Industries Company reported the following on its income statement:
Income before income taxes $420,000
Income tax expense (120,000)
Net income $300,000
If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned ratio?
a. 5 times.
b. 6.25 times.
c. 5.25 times.
d. 8 times.
Answer:
Option c. 5.25 times is the correct answer.
Explanation:
Below is the calculation:
Income before income tax = $420000
Income tax expenses = 120000 dollars
Net income = $300000
Interest expense = $80000
Interest earned ratio = Earning Before Interest and Taxes / Interest Expenses
Interest earned ratio = 420000 / 80000
Interest earned ratio = 5.25 times
Option c. 5.25 times is the correct answer.
Assets Liabilities Reserves $3000 Deposits $22,000 Loans $20,000 Debt $2000 Securities $5,000 Balance sheet for Fictional First bank Refer to the balance sheet above. Suppose the reserve requirement is 10%. What is the maximum amount that Fictional First can loan out and still meet the reserve requirement?a. $1200 b. $3000 c. $800 d. $2200 e. $0
Answer: $800
Explanation:
If the reserve requirement is 10%, then the maximum amount that Fictional First can loan out and still meet the reserve requirement will be:
Deposits = $22000
Then, the required reserve will be
= 10% × $22000
= 0.1 × $22000
= $2200
Since, the reserves is $3000, then the additional amount that's held as reserves will be:
= $3000 - $2200
= $800.
Therefore, the maximum amount that Fictional First can loan out and still meet the reserve requirement is $800.
The maximum amount that Fictional First can loan out is $800 and still meet the reserve requirement.
How to calculate the maximum loan amount?The reserve requirement is given as 10% and deposits $22000, the amount required to set aside as reserves would be;
[tex]0.1*22000\\=2200[/tex]
Now, with Assets Liabilities Reserves as $3000, the more amount that should be reserved would be;
[tex]3000-2200\\=800[/tex]
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Assume that you are a loan officer of a bank. A local church is seeking a $4 million, 20-year loan to construct a new classroom building. Church officers submit a comprehensive financial report that was audited by a reputable CPA firm. In summary form (the actual statement showed details), the church’s statement of revenues and expenditures indicated the following (in millions):
Revenues from dues and contributions .... $1.8
Revenues from other sources ....... 0.2
Total revenues ............. $2.0
Less: total expenditures .......... 2.0
Excess of revenues over expenditures .... $0.0
The church's balance sheet reported assets, mainly cash and investments (at market value), of $0.2 million. In addition, a note to the financial statements indicated that equipment is approximately $3 million. The church has no outstanding debt.
a. Is there any information in the financial statements that would make you reluctant to approve the loan? If so, indicate and explain.
b. Is there any other financial information of the type likely to be reported in a conventional annual report that you would like to review prior to making a loan decision? If so, indicate and explain.
c. Is there any other information, of any type, that you would like to review prior to making a loan decision? If so, indicate and explain.
d. Comment on the inherent limitations of the financial statements of this church, or any comparable not-for-profit organization, as a basis for making loan decisions.
Answer:
Explanation:
a.
There is little information on how funds are used or how much money is spent to manage the church. The financial statements have been prepared incorrectly.
Interpretation:
While drafting the financial accounts, the church committed many errors. The church's revenue is equivalent to its daily operations operating expenditures. They have approximately $3 million in funding assets that they do not owe any money on.
It may be deduced that the church is attempting to preserve asymmetric information, and therefore it will be better to justify its sources of income and use of money in order to determine whether they can or they cannot pay the debt.
b.
The revenue from various channels must be detailed in the yearly report so that the loan officer may make an informed judgment.
Interpretation:
Since payments and contributions account for 90% of revenue and revenue from other sources accounts for 10%, it's surprising how the church earns money in other ways as stated on the income statement. As a result, it's important to understand what other potential revenue streams the church has before approving the loan.
c.
The officer in charge of the loan should check the church's book records to make sure and guarantee that there are no outstanding loans. This situation necessitates a thorough examination and assessment.
Interpretation:
The church has $3 million worth of equipment. The church's expenses, on the other hand, are equivalent to the church's income. As a result, it's unclear how the church acquired the equipment without taking out a loan. As a result, the church must be urged to produce a full breakdown of its expenses, which may be thoroughly and fully studied to see whether there are any financing charges that the church is attempting to hide in its yearly reports.
d.
There is no direct or primary source of income for the church. It solely makes money from charity donations.
Interpretation:
The church's only sources of income are fundraisers and charitable donations. It also doesn't possess any significant revenue streams. Because the church is attempting to conceal numerous possible pieces of information, this may be a case of micro-management by the proprietors, and so these issues should be considered by the officer in charge of the loan before accepting the loan.
______contains journal vouchers of past periods for audit trail
Answer:
Journal voucher history file
Darkover Inc., as part of its strategic planning process, is considering making some policy changes. What effect (i.e. Increase, Decrease, No Effect) would each the following changes have on Darkover's Net Cash Flow from Operating Activities? Assume that in each case, the change only affects the account or accounts mentioned (i.e. all other accounts are not changed by the action).
Question Completion:
_____(a) Increase investment in new plant and equipment.
_____(b)Change the collections policy to insure that receivables are collected sooner.
_____(c)Change inventory policy to increase the amount of raw materials kept on hand (work in process and finished goods inventory will remain unchanged).
_____(d)Sell long term bonds and use the proceeds to reduce notes payable
._____(e) Begin paying all employees every week instead of every two week, effectively decreasing accruals.
_____(f)Change accounts payable policy to pay bills in 20 days instead of 10 days.
Answer:
Darkover Inc.
Effects of Changes on Darkover's Net Cash Flow from Operating Activities:
_No Effect____(a) Increase investment in new plant and equipment.
Increase_____(b) Change the collections policy to insure that receivables are collected sooner.
Decrease_____(c) Change inventory policy to increase the amount of raw materials kept on hand (work in process and finished goods inventory will remain unchanged).
Decrease_____(d) Sell long term bonds and use the proceeds to reduce notes payable
Decrease_____(e) Begin paying all employees every week instead of every two week, effectively decreasing accruals.
Increase_____(f) Change accounts payable policy to pay bills in 20 days instead of 10 days.
Explanation:
Darkover's net cash flow from operating activities is the result of accumulating the cash inflows and outflows from its operating activities. Operating activities are the normal activities that Darkover carries out from which it earns its revenues and incurs related expenses. They are the day-to-day activities through which the mission of the entity is carried out.
