Answer:
b. activity-based costing is not applicable to service businesses.
Explanation:
b.- activity cost was created with the idea of being used for sercive business. It distribute the phases of the service in diferent activities and assing cost to them. This statment is FALSE ABC can be used for service business
Businesses hold short-term securities for which of the following reasons
A.As a substitute for cash
B.As a temporary repository for cash being accumulated for a specific purpose
C.As a buffer against bad debt losses
D. Answers a. and b. are both correct
E.Answers a., b., and c. are all correct
Answer: Option D
Explanation: Short term investments can be defined as the liquid investments that are expected to be sold or be converted into cash within a particular time period, generally a year or operating cycle of the company. Primary examples are commercial paper and US treasury bills.
These are generally used to have cash availability at short term notice in the entity or for some future project funding investment. For bad debt buffering specific provisions are made.
Businesses hold short-term securities as a substitute for cash and as a temporary repository for cash for specific purposes, but not typically as a buffer against bad debt losses.
Explanation:Businesses hold short-term securities for a couple of key reasons. A. As a substitute for cash and B. As a temporary repository for cash being accumulated for a specific purpose are both correct answers. Holding short-term securities is a liquidity management strategy. These securities are easily convertible to cash, providing businesses with flexibility to cover short-term expenses or opportunities. It is not typically done as a buffer against bad debt losses, which is more associated with accounting practices and credit risk management.
MC Qu. 95 A job was budgeted to require... A job was budgeted to require 2 hours of labor per unit at $12.00 per hour. The job consisted of 8,000 units and was completed in 15,000 hours at a total labor cost of $196,200. What is the direct labor rate variance?
Answer:
The direct labor rate variance is negative 16,500
Explanation:
8,000 units at 2hours per unit = 16,000 hours x $12 per hour = $192,000 standart cost for the job
actual 15,000 hours and $196,200 total labor cost
labor cost per hour = 196,200/15,000 = 13.1 actual rate per hour
( standar rate - actual rate ) x actual hours = rate variance
(12 - 13.1) x 15,000 = -1.1 x 15,000 = -16,500
A monopolist earns $60 million annually and will maintain that level of profit indefinitely, provided that no other firm enters the market. However, if another firm enters the market, the monopolist will earn $60 million in the current period and $20 million annually thereafter. The opportunity cost of funds is 18 percent, and profits in each period are realized at the beginning of each period.
a. What is the present value of the monopolist’s current and future earnings if entry occurs?b. If the monopolist can earn $35 million indefinitely by limit pricing, should it do so? Explain.
Answer:
Given:
Monopolist earns = $60 million
The opportunity cost of funds = 18 %
The monopolist will earn = $20 million after another firm enters the market
The present value of the monopolist’s current and future earnings if entry occurs can be computed using the following formula:
[tex]\Pi_{MD} = Earning Annualy + \frac{Earning After firm enters}{Opportunity cost}[/tex]
[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]
[tex]\Pi_{MD} = 60 + \frac{20}{0.18}[/tex]
[tex]\Pi_{MD} = 171.1[/tex]
The present value of the monopolist’s is $171.1 million
If the monopolist can earn $35 million indefinitely by limit pricing,then the present value of the monopolist’s current earnings:
[tex]\Pi_{MD} = \Pi_{M} + \frac{\Pi_{D}}{i}[/tex]
[tex]\Pi_{MD} = 60 + \frac{35}{0.18}[/tex]
[tex]\Pi_{MD} = 254.4[/tex]
∴ If the monopolist can earn $35 million indefinitely by limit pricing, then they should do so.
Final answer:
The present value of the monopolist’s earnings when entry occurs is the $60 million for the first year plus the discounted value of the $20 million annual profit thereafter. When compared to the present value of $35 million annual profits indefinitely achieved through limit pricing, the monopolist can make a strategic decision by comparing the present values of both scenarios.
Explanation:
To solve for the present value of the monopolist's current and future earnings with another firm entering the market, we must discount the future profits to the present value using the opportunity cost of funds, in this case, 18%. The monopolist earns $60 million initially and $20 million annually thereafter. The present value of earning $60 million indefinitely is calculated by dividing $60 million by the opportunity cost rate, which is $60 million / 0.18. However, since entry occurs, we calculate the present value of the first year's profit of $60 million plus the perpetuity starting from the second year at $20 million annually, discounted by the 18% rate.
The first year's profit is:
PVfirst year = $60 million
The perpetuity starting from the second year is:
PVsecond year onwards = $20 million / 0.18
The total present value when another firm enters the market is:
PVtotal = PVfirst year + PVsecond year onwards / (1 + 0.18)
In the case of limit pricing, the monopolist would earn $35 million indefinitely. To calculate the present value of these earnings:
PVlimit pricing = $35 million / 0.18
To decide if the monopolist should pursue limit pricing, we compare the present value of earnings with limit pricing to that of earning $60 million initially and $20 million thereafter when there is entry.
Online aggregators are more comprehensive than the home listing service that real estate agents use. True or False
Answer:
The given statement is True. Online Aggregators are more comprehensive than the home listing service that real estate agents use.
Explanation:
Online aggregators are the programs or sites in the digital space which collects related items of content and link them and show them through their sites or programs.
Online aggregators puts the most relevant information that people are looking for. They link different aspects with each other to help people take decisions, like in this question, regarding the real estate.
Real Estate agents don't tell certain information to the client due to some laws or some insecurities of loosing the clients, but online aggregators make each and everything clear and even finds links between the choices of homes and display them on their sites. For example, an online aggregator may list the houses that are near to schools, hospitals, community service centers and also put the ranking of those schools and other services in that area, they tell the crime rate in that area, security, etc. But all such things are usually kept hidden by the real estate agents due to some overly restricted codes in their agreement of the licence from the government.
It is true!
Further Explanation:
Online aggregators:
A substance aggregator is an individual or association that assembles web content (or potentially at times applications) from various online hotspots for reuse or resale.
online aggregators more extensive than the home posting administration:
Online Aggregators are more exhaustive than the home posting administration that realtors use. Clarification: Online aggregators are the projects or locales in the computerized space which gathers related things of substance and connection them and show them through their destinations or projects.
Aggregators:
In the computerized fund environment, aggregators work as the paste that enables substances to like organizations, governments and benefactors effectively associate with an assortment of installment stages like portable cash administrations or banks and the clients who pay by means of those administrations.
The reason for an aggregator:
A substance aggregator is an individual or association that assembles Web content (as well as at times applications) from various online hotspots for reuse or resale.
Aggregator model:
An aggregator model is a type of E-Commerce in which a site does not store or distribution center its own merchandise, yet rather gathers, or totals, data on a few products and ventures and combinations them into a solitary stage.
Subject: business
Level: college
Keywords: online aggregators, online aggregators more extensive than the home posting administration, Aggregators, The reason for an aggregator, Aggregator model.
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Cash received before services are performed may be recorded as a debit to a Cash account and a credit to a liability account is calleda. an unearned revenueb. an accrued revenue.c. accounts payabled. None of these answer choices are correct.e. an unrecorded revenue
Answer: An unearned revenue
Explanation: When any individual or entity receives money from customers for such service which has not been performed yet, then such income is termed as unearned revenue.
Unearned revenue is considered to be the liability of the recipient and and asset for the payee.
So from the above explanation we can conclude that right option is unearned revenue.
"Use the following information for the Quick Study below. The plant assets section of the comparative balance sheets of Anders Company is reported below.
ANDERS COMPANY
Comparative Balance Sheets
2017 2016
Plant assets
Equipment $195,000 $285,000
Accum. Depr.—
Equipment (106,000) (216,000)
Equipment, net $89,000 $69,000
Buildings $395,000 $415,000
Accum. Depr.—
Buildings (109,000 ) (294,000 )
Buildings, net $286,000 $121,000"
QS 16-5 Indirect: Computing investing cash flows LO P2
During 2017, equipment with a book value of $43,000 and an original cost of $225,000 was sold at a loss of $3,600.
1. How much cash did Anders receive from the sale of equipment?
2. How much depreciation expense was recorded on equipment during 2017?
3. What was the cost of new equipment purchased by Anders during 2017?
1. Cash received from the sale of equipment is $39,400. 2. Depreciation expense recorded on equipment in 2017 is $110,000. 3. Cost of new equipment purchased in 2017 is $185,000.
Explanation:1. The cash received from the sale of equipment can be determined by calculating the difference between the book value of the equipment and the loss on the sale. In this case, the book value of the equipment is $43,000 and the loss on the sale is $3,600. Therefore, the cash received would be $43,000 - $3,600 = $39,400.
2. The depreciation expense recorded on equipment during 2017 can be calculated by taking the difference in the accumulated depreciation of equipment between 2017 and 2016. In this case, the accumulated depreciation in 2017 is $106,000 and in 2016 it is $216,000. Therefore, the depreciation expense for 2017 would be $216,000 - $106,000 = $110,000.
3. The cost of new equipment purchased by Anders during 2017 can be determined by taking the difference in the net plant assets (equipment and buildings) between 2017 and 2016. In this case, the net plant assets in 2017 is $89,000 (equipment) + $286,000 (buildings) = $375,000, and in 2016 it is $69,000 (equipment) + $121,000 (buildings) = $190,000. Therefore, the cost of new equipment purchased during 2017 would be $375,000 - $190,000 = $185,000.
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Anders Company received $39,400 from the sale of equipment. A total depreciation expense of $72,000 was recorded on equipment during 2017. The cost of new equipment purchased in 2017 was $135,000.
Given the information in the comparative balance sheets and additional details of the equipment sale, we can answer the following questions:
How much cash did Anders receive from the sale of equipment?
The book value of the equipment sold was $43,000, and it was sold at a loss of $3,600. The cash received is the book value minus the loss, which can be calculated by:
43,000 - 3,600 = $39,400
How much depreciation expense was recorded on equipment during 2017?
The accumulated depreciation on equipment decreased from 2016 to 2017, suggesting that some assets were removed (in this case, sold). To find out how much was for depreciation apart from the disposition of equipment, we add the accumulated depreciation related to the sold equipment (original cost $225,000 minus book value $43,000) to the ending accumulated depreciation:
225,000 - 43,000 = 182,000
Then, the increase in depreciation is the beginning accumulated depreciation minus the ending accumulated depreciation, including the adjustment for sold equipment:
216,000 - (106,000 + 182,000) = $72,000.
What was the cost of new equipment purchased by Anders during 2017?
To find the cost of new equipment purchased, we start with the beginning equipment cost, subtract the cost of equipment sold, add the ending equipment total, and then subtract the original equipment cost total:
285,000 - 225,000 + 195,000 - 285,000 = $135,000.
Bryant Company has a factory machine with a book value of $90,800 and a remaining useful life of 7 years. It can be sold for $27,200. A new machine is available at a cost of $407,400. This machine will have a 7-year useful life with no salvage value. The new machine brings annual variable manufacturing costs from $640,100 to $631,800. Prepare an analysis showing whether the old machine should be retained or replaced.
Answer:
The old machine should be retained.
Explanation:
[tex]\left[\begin{array}{cccc}&continue&replace&Differential\\Proceeds \: from \: sale&0&27,200&27,200&Cost:&&&&purchase&0&-407,400&-407,400&manufacturing\:cost&-4,480,700&-4,422,600&58,100&Total \:cost&-4,480,700&-4,830,000&-349,300&Net&-4,480,700&-4,802,800&-322,100&\end{array}\right][/tex]
The old machine should be retained.
The differential analisys shows cost will increase 322,100 if replaced.
The sale from the old machine is an income for the relacement alternative.
the cost of the new machine is an expense
the value of the 7 years of manufacturing cost show a cost saving for 58,100
this savings, along with the proceeds from the old machine, doesn't cover the acquisition of the new machine. It is a bad investment.
Based on the cost-benefit analysis, purchasing the new machine is more cost-efficient for the Bryant Company over a span of seven years. The total cost of keeping the old machine is higher than replacing it with a new one by $111,700.
Explanation:The question is asking whether the Bryant Company should replace an existing factory machine or continue to use it based on its book value, potential sale value, and the cost and benefits of a new machine. To resolve this, we need to conduct a cost-benefit analysis.
First, let's calculate the total cost of keeping the old machine: over 7 years, the remaining depreciation is the book value which is $90,800, plus, the annual manufacturing cost which is $640,100 multiplied by 7 years, equals to about $4,570,500.
Second, let's calculate the cost of replacing it with a new one: the new machine will cost $407,400, plus $27,200 (the net loss from selling the old machine), plus the new manufacturing costs (annual $631,800 multiplied by 7 years) which is about $4,458,800.
The difference between the two options (keeping the old machine and buying a new machine) is $4,570,500 - $4,458,800 = $111,700. This shows that buying a new machine is more cost-efficient by $111,700 over 7 years.
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Main Street Distributors, a wholesale firm, made sales using the following list prices and trade discounts. What amount should be recorded for each sale? List price of $3,400 and trade discounts of 20 percent and 10 percent. List price of $4,100 and trade discounts of 20 percent and 10 percent. List price of $2,450 and trade discounts of 30 percent and 20 percent.
Answer: Amount should be recorded for each sale are as follows:
Explanation:
(a) The amount should be recorded for the list price of $3,400 and trade discounts of 20 percent and 10 percent are as follows:
List price = $3400
Less 20% trade discount on $3400 = 20% × 3400 = ($680)
Balance = $2720
Less 10% trade discount on $2720 =10% × 2720 = ($272)
The amount recorded for sales = 2720 - 272 = $2448
(b) The amount should be recorded for the list price of $4,100 and trade discounts of 20 percent and 10 percent are as follows:
List price = $4,100
Less 20% trade discount on $4100 = 20% × 4100 = ($820)
Balance = $3280
Less 10% trade discount on $3280 =10% × 3280 = ($328)
The amount recorded for sales = 3280 - 328 = $2952
(c) The amount should be recorded for the list price of $2,450 and trade discounts of 30 percent and 20 percent are as follows:
List price = $2450
Less 30% trade discount on $2450 = 30% ×2450 = ($735)
Balance = $1715
Less 20% trade discount on $1715 = 20% × 1715 = ($343)
The amount recorded for sales = 1715 - 343 = $1372
1. The amount recorded for the sale with a list price of $3,400 and trade discounts of 20% and 10% is $2,448.
2. The amount recorded for the sale with a list price of $4,100 and trade discounts of 20% and 10% is $2,952.
3. The amount recorded for the sale with a list price of $2,450 and trade discounts of 30% and 20% is $1,372.
To calculate the amount recorded for each sale after applying the trade discounts, we need to apply the discounts sequentially to the list prices provided.
1. For the first sale:
List price = $3,400
Trade discounts: 20% and then 10%
Calculation:
Step 1: Apply the first discount of 20%:
Discounted price after 20% = $3,400 - (0.20 * $3,400) = $3,400 - $680 = $2,720
Step 2: Apply the second discount of 10% to the discounted price:
Final price after 10% = $2,720 - (0.10 * $2,720) = $2,720 - $272 = $2,448
Therefore, the amount recorded for the first sale is $2,448.
2. For the second sale:
List price = $4,100
Trade discounts: 20% and then 10%
Calculation:
Step 1: Apply the first discount of 20%:
Discounted price after 20% = $4,100 - (0.20 * $4,100) = $4,100 - $820 = $3,280
Step 2: Apply the second discount of 10% to the discounted price:
Final price after 10% = $3,280 - (0.10 * $3,280) = $3,280 - $328 = $2,952
Therefore, the amount recorded for the second sale is $2,952.
3. For the third sale:
List price = $2,450
Trade discounts: 30% and then 20%
Calculation:
Step 1: Apply the first discount of 30%:
Discounted price after 30% = $2,450 - (0.30 * $2,450) = $2,450 - $735 = $1,715
Step 2: Apply the second discount of 20% to the discounted price:
Final price after 20% = $1,715 - (0.20 * $1,715) = $1,715 - $343 = $1,372
Therefore, the amount recorded for the third sale is $1,372.
In each case, the calculation involves subtracting the percentage discount from the list price sequentially. This approach reflects how trade discounts are applied in practice to determine the final recorded amount for each sale in a wholesale transaction.
Kathleen is a member of the human resource department at Jade Corp. Setting a goal to enhance the firm's strategy, Kathleen works to attain it by understanding the current human resources. Through a series of surveys, interviews, and observations, she learns what talents the various departments of Jade Corp. are currently in need of, and attracts new human resources according to those requirements. What kind of HRM responsibility does this example illustrate?
Answer: HRM's responsibility to serve as a strategic partner
Explanation: an strategic partner is the person with whom a long-term agreement is reached for sharing of physical and/or intellectual resources in achievement of defined common objective.
Ayer Furniture purchased land, paying $ 65 comma 000 cash and signing a $ 330 comma 000 note payable. In addition, Ayer paid delinquent property tax of $ 2 comma 500, title insurance costing $ 6 comma 000, and $ 5 comma 000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $ 650 comma 000. It also paid $ 48 comma 000 for a fence around the property, $ 15 comma 000 for a sign near the entrance, and $ 10 comma 000 for special lighting of the grounds. Determine the cost of the land, land improvements, and building. The cost of the land is $ .
Answer:
The cost of land is $408,500.
Explanation:
For calculating the amount of cost of land . Following things is need to be considered.
1. Cash Paid - $ 65,000
2. Notes Payable - $330,000
3. Property tax - $2,500
4. Title Insurance - $6,000
5. Land leveling cost - $ 5,000
Other costs are irrelevant because it is not related to the land.
The cost of land includes those cost which is related to the land. It can be any transactions, any tax or anything. Whether the cost is additional also, but it should be associated to the land.
So,
Cost of land = Cash paid + notes payable + property tax + title insurance + land leveling cost
= $ 65,000 + $330,000 + $2,500 + $6,000 + $ 5,000
= $408,500
Hence, the cost of land is $408,500.
The market price of a security is $60. Its expected rate of return is 10%. The risk-free rate is 6%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity. (Round your answer to 2 decimal places.)
Answer:
The market price of the security will be $42.86 when the Beta doubles and all other variables remains constant.
Explanation:
Given information - Current market price = $60
Risk free rate = 6%
Expected rate of return = 10%
Market risk premium = 8%
In this question we have to find the market price of the security when beta doubles it self, the formula which we can use to take out the market price is,
\frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}
But here we have to first find out both the dividend and new expected rate of return and it is also told here that beta doubles itself but we don't know what the initial beta is, so lets take out what beta is , using formula for expected rate of return
Expected rate of return = Risk free rate + Beta x Market risk premium
10% = 6% + Beta x 8%
4% = Beta x 8%
Beta = 4% / 8%
Beta = 1% / 2% = .01 / .02 = .5
Now doubling the beta = .5 x 2 = 1
Putting this value of beta in the expected rate of return formula to calculate the new expected rate of return,
New expected rate of return = 6% + 1 x 8%
= 14%
Now we just have to find the dividend , which we can by using formula of
Market price = \frac{DIVIDEND}{\:EXPECTED\:RATE\: OF\: RETURN}
$60 = Dividend / 10% (10% = .1)
$60 x .1 = Dividend
$6 = Dividend
Now we have both dividend and new market rate of return and we just have to put these values in the formula
\frac{DIVIDEND}{NEW\:EXPECTED\:RATE\: OF\: RETURN}
New market price = $6 / 14% (14% = .14)
= $6 / .14
= $42.86
Answer: $42.85 per share
Explanation:
Given that,
The market price of a security(P) = $60 per share
expected rate of return(ERR) = 10%
the market risk premium(MRP) = 8%
risk-free rate(RFR) = 6%
ERR = RFR + Beta × (MRP)
10 = 6 + Beta(8)
Beta = [tex]\frac{4}{8}[/tex]
= 0.5
In this question, it is given that constant dividend paid in perpetuity
current market price per share, P = [tex]\frac{DPS}{ERR}[/tex]
Where, DPS - dividend per share
60 × 0.1 = DPS
$6 per share = DPS
If beta doubles then,
Beta = 0.5 × 2
= 1
∴ Required rate of return = 6 + 1 × 8
= 14%
So, market price of security = [tex]\frac{DPS}{Required rate of return}[/tex]
= [tex]\frac{6}{0.14}[/tex]
= $42.85 per share
A firm has a stock price of $50 per share. The firm’s past 12 month earnings per share is $2.5 and the firm's future earning is $5 per share. The firm has an ROE of 20% and a dividend payout ratio of 50%. Given an industry average PEG ratio of 1.6, is the firm’s stock more likely to be overpriced or underpriced? A. Overpriced, because it has PEG ratio of 2 B. Overpriced, because it has PEG ratio of 1 C. Underpriced, because it has a PEG ratio of 1 D. Underpriced, because it has a PEG ratio of 2
Answer:
Given:
Firm with an average Price/Earning-Growth(PEG) ratio of 1.6, the stock price is Overpriced, because it has Price/Earning-Growth(PEG) ratio of 1.
where;
PEG = [tex]\frac{Price/Earning}{Earning\:Grtowth\:Rate}[/tex]
Price/Earning ration = [tex]\frac{Share Price}{Earning per share}[/tex]
Reason: It can be stated that a PEG ratio of less than 1 denotes that the stock is a good investment since it is below its “fair value.”
If a PEG ratio is greater than 1 this will further means that stock is relatively expensive,and overpriced.
Therefore, the correct option is (b) Overpriced, because it has Price/Earning-Growth(PEG) ratio of 1.
A company had the following purchases and sales during its first year of operations: Purchases Sales January: 10 units at $120 6 units February: 20 units at $125 5 units May: 15 units at $130 9 units September: 12 units at $135 8 units November: 10 units at $140 13 units On December 31, there were 26 units remaining in ending inventory. Using the Periodic LIFO inventory valuation method, what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
Answer:
Ending Inventory under LIFO $3,270
Explanation:
[tex]\left[\begin{array}{cccc}Month&Purchase&Sales&Remaining\\January&10&-6&4\\February&20&-5&15\\May&15&-9&6\\September&12&-8&1\\November&10&-13&0\\Total&67&-41&26\\\end{array}\right][/tex]
First: in LIFO you always start from the bottom line
subtracting the sales figure for each period.
Notice in nomvember the sales are greater than the amount purchased, so we decrease the september units by the diference
[tex]\left[\begin{array}{cccc}Month&Units&Cost&Subtotal\\January&4&120&480\\February&15&125&1,875\\May&6&130&780\\September&1&135&135\\November&0&140&0\\Total&26&-&3,270\\\end{array}\right][/tex]
Final answer:
Using the Periodic LIFO inventory valuation method, the value of the Cost of Goods Sold (COGS) is $4995. This is calculated by taking the cost of the most recent inventory purchases and working backward until all units sold are accounted for.
Explanation:
To calculate the Cost of Goods Sold (COGS) using the Periodic LIFO method, we need to match the most recent unit costs with the units sold. Under LIFO, the last items purchased are the first ones sold. We know there were 26 units in ending inventory on December 31. We must assume the sales were made right before the year ended, leaving the most recently purchased inventory to be sold last.
Let's calculate COGS step-by-step:
Begin with the most recent purchases and work backward until we account for the total number of units sold.
November: 10 units at $140 each
September: 8 units at $135 each
May: 9 units at $130 each
February: 5 units at $125 each
January: 6 units at $120 each
Now, calculate the value of the COGS:
November (10 units x $140) + September (8 units x $135) + May (9 units x $130) + February (5 units x $125) + January (6 units x $120)
COGS = ($1400) + ($1080) + ($1170) + ($625) + ($720)
COGS = $4995
In this case, the value of cost of goods sold is $4995 using the Periodic LIFO method.
During the last year, Globo-Chem Co. generated $1,053 million in cash flow from operating activities and had negative cash flow generated from investing activities (-$576 million). At the end of the first year, Globo-Chem Co. had $180 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year
The second-year cash flow from financing activities for Globo-Che Co. was -$377 million. This was calculated using the cash flow formula and the provided cash flows from operations, investing, and the change in cash.
Explanation:To find the cash flow from financing activities for Globo-Chem Co., we need to use the formula for cash flow, which is: Cash Flow from Operations + Cash Flow from Investing + Cash Flow from Financing = Change in Cash. We know the cash flow from operations ($1,053 million), the cash flow from investing (-$576 million), and the change in cash ($280 million - $180 million = $100 million).
Applying these values to the formula: $1,053 million - $576 million + Cash Flow from Financing = $100 million. Solving for Cash Flow from Financing, we get: Cash Flow from Financing = $100 million - $1,053 million + $576 million = -$377 million. Thus, the cash flow due to financing activities in the second year of Globo-Chem Co.'s operation was -$377 million.
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Which of the following ratios useful in assessing the liquidity position of a company?
Incorrect A.
Both defensive-interval ratio and return on stockholders' equity
B.
Defensive-interval ratio only
C.
Return on stockholders' equity only
D.
Neither defensive-interval ratio nor return on stockholders' equity
Answer:
The option B is a correct answer which is useful in assessing the liquidity position of a company.
Explanation:
Defensive Interval Ratio :
The defensive interval ratio (DIR) is that ratio which measures that by how many days can company operate without fixed assets or non current assets.
It is a type of liquidity ratio which shows that company can pay its current obligations without impacting long term obligations. It is always display in days.
Return on Stockholders' equity :
The return on stockholder equity is a profitability ratio which represents how much the company is earning profit during a particular period.
Liquidity ratio:
The liquidity ratio is that ratio which shows the relationship between current assets and current liabilities. It describes that how the company can meet its short term obligations with its available current assets.
Thus, by above explanation it is clear that the option B is a correct answer which is useful in assessing the liquidity position of a company.
The defensive-interval ratio is the only ratio among the options provided that is useful in assessing the liquidity position of a company. It measures the company's ability to cover daily operational expenses with its liquid assets. Return on stockholders' equity is related to profitability rather than liquidity.
Explanation:To assess the liquidity position of a company, certain financial ratios are used. The correct answer to which ratio is useful in assessing this is B. Defensive-interval ratio only. The defensive-interval ratio (also known as the defensive interval period) measures a company's ability to operate without access to additional external financial resources. It calculates how many days a company can cover its cash expenses without the need for additional cash inflows. This ratio is computed by dividing liquid assets by daily operational expenses.
On the other hand, the return on stockholders' equity (ROE) measures a company's profitability and how efficiently it uses its equity capital. It is not a measure of liquidity but of profitability and return on investment. To calculate ROE, you divide net income by average shareholders' equity.
Therefore, for assessing liquidity, we focus on ratios that evaluate how well a company can meet its short-term obligations, like the defensive-interval ratio. Ratios dealing with profitability or return on investment, such as ROE, are not relevant to liquidity assessments.
For each example listed, decide if the good is a normal good or an inferior good. Make sure you answer from the perspective of the individual or individuals doing the buying or consuming.
Billy's mom increases his weekly allowance by $ 55 . As a result, Billy increases the number of apps he downloads on his smartphone. Smartphone apps are:
Susan gets a 1515 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are:
Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is:
Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are
Answer:
Billy's mom increases his weekly allowance by $ 55 . As a result, Billy increases the number of apps he downloads on his smartphone.
If with increase in income demand increases, the good will be a normal good. Thus, apps that billy downloads are normal goods.
Susan gets a 15 percent performance bonus at work. She can finally stop eating so many frozen pizzas and eat something more tasty. Frozen pizzas are: Inferior goods
Here with increase in income, the demand for a commodity falls, the so called commodity is a inferior good. Thus, in this case frozen pizzas are inferior goods.
Mike is an appliance salesman. Refrigerator sales in his store have fallen and so has his commission. Mike decides to switch from name brand cereal to generic cereal. Generic cereal is: Inferior goods
If there is a fall in income and thus demand increases, the good is inferior. Thus, in this case generic cereal is an inferior good.
Hair stylist Molly loses a few of her clients. Molly cuts back on the number of smoothies she buys during the week. Smoothies are: Normal goods
If there is a decrease in income and thus demand falls, the good is normal. Thus, smoothies as commodity in this case will be refereed to as normal goods.
Final answer:
Smartphone apps are normal goods, frozen pizzas are inferior goods, generic cereal is a normal good, and smoothies are inferior goods.
Explanation:
According to the information provided, we can determine if a good is a normal good or an inferior good by analyzing the relationship between income and quantity consumed.
When Billy's mom increases his allowance and Billy increases the number of apps he downloads on his smartphone, this suggests that smartphone apps are normal goods. As income rises, the quantity consumed of normal goods also increases.When Susan gets a performance bonus at work and chooses to stop eating frozen pizzas in favor of something more tasty, this suggests that frozen pizzas are inferior goods. As income rises, the quantity consumed of inferior goods decreases.When Mike, an appliance salesman, switches from name brand cereal to generic cereal because refrigerator sales in his store have fallen, this suggests that generic cereal is a normal good. As income falls, the quantity consumed of normal goods tends to increase.When hair stylist Molly loses a few clients and cuts back on the number of smoothies she buys during the week, this suggests that smoothies are inferior goods. As income falls, the quantity consumed of inferior goods tends to increase.Presented below are two independent transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) Bridgeport Restaurant accepted a Visa card in payment of a $300 lunch bill. The bank charges a 2% fee. What entry should Bridgeport make? (b) Sarasota Company sold its accounts receivable of $76,000. What entry should Sarasota make, given a service charge of 2% on the amount of receivables sold?
Answer:
Explanation:
Journal Entry : The journal entry is a recording of transactions which have two sides i.e. debit side and credit side. Debit side records all expenditures and losses, whereas credit side records income and gains.
(a) The entry which Bridgeport should make is shown below:
Cash A/c Dr $294
Bank charge expense Dr ($300 × 2%) = 6
To Sales Revenue $300
(b) The entry which Sarasota should make, given a service charge of 2% on the amount of receivables sold is shown below:
Cash A/c Dr $74,480
Bank charge expense Dr ($76,000 × 2%) = $1,520
To Accounts Receivable $76,000
Bridgeport Restaurant will record a debit to Cash for the amount received after the bank fee ($294) and a debit to Bank Service Charge Expense ($6) with a credit to Sales Revenue ($300). Sarasota Company will record a debit to Cash for the amount received after the service charge ($74,480), a credit to Accounts Receivable ($76,000), and a debit to Loss on Sale of Receivables ($1,520).
Explanation:In the case of Bridgeport Restaurant, the entry in their books will reflect a debit (increase) to Cash for the amount received after deduction of the 2% bank fee. This would be $294 [(100% - 2%) x $300]. The restaurant will also make a credit (increase) to Sales Revenue for $300. Lastly, they'll record a debit (increase) to Bank Service Charge Expense for the $6 fee [$300 x 2%].
As for the Sarasota Company, when they sell their accounts receivable of $76,000, they'll record a debit (increase) to Cash for the amount they receive after the service charge has been subtracted. This would be $74,480 [(100% - 2%) x $76,000]. They'll also have to record a credit (decrease) to Accounts Receivable for $76,000 to clear that balance. Lastly, a debit (increase) to Loss on Sale of Receivables will be recorded for the amount of the service charge, which is $1,520 [$76,000 x 2%].
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In the past, Human Resources (HR) was treated as a ____ function with only an indirect link to corporate strategy. Today, HR is being embedded in organizational strategy.
Answer:
Support - Staff
Explanation:
In the past, Human Resources (HR) was treated as a support - staff function with only an indirect link to corporate strategy. Today, HR is being embedded in organizational strategy.
Financial information is presented below: Operating Expenses $ 90800 Sales Returns and Allowances 26600 Sales Discounts 11200 Sales Revenue 293000 Cost of Goods Sold 158600 Gross profit would be $96600. $107800. $123200. $134400.
Answer:
The correct answer would be option A, $96600.
Explanation:
Gross profit is the amount of profit which a company earns after deducting all the costs which incurred in the making and sale of the products of the company.
Gross profit can be found out by the following formula:
Gross Profit = Total Sales - Cost of Goods Sold
Total Sales will be Sales Revenue - Sales Return - Sales Discounts
So here total sales revenue will be = 293000 - 26600 - 11200
= 255200
Total sales Revenue: 255200
Cost of goods Sold = 158600
Gross Profit = 255200 - 158600
Gross Profit = $96600
Burnett Corp. pays a constant $9.05 dividend on its stock. The company will maintain this dividend for the next 9 years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?
Answer:
52.12
Explanation:
The present value of an annuity of $9.05 for 9 years at a 10% will be $52.12
So the current share price of Burnett Corp must be $52.12 to fullfil the requirement of a 10% return
Answer:
The answer is $52.12.
Explanation:
We apply the dividend discount model to come up with the price for share.
The price for share under the dividend discount model is the present value of all its future dividend discounted at the required rate of return.
As the share has 9 annual equal dividend payments of $9.05 each year and the required rate is 10%, we have the price of the share is calculated by applying the annuity formula as:
(9.05/0.1) * [1 - 1.1^(-9) ] = $52.12.
So, the current share price is $52.12.
Baltimore Manufacturing Company just completed its year ended December 31, 2018. Depreciation for the year amounted to $160,000: 25% relates to sales, 20% relates to administrative facilities, and the remainder relates to the factory. Of the total units produced during FY 2016: 85% were sold in 2018 and the rest remained in finished good inventory. Use this information to determine the dollar amount of the total depreciation that will be contained in Cost of Goods Sold. (Round dollar values & enter as whole dollars only.)
Answer:
70,400 accounted for Cost of Goods Sold
Explanation:
1 - 25% sales - 20% admin = 1 - 45% = 55% factory
160,000 x 55% = 88,000 accounted for Goods Produced
88,000 x 80% sold = 70,400 accounted for Cost of Goods Sold
88,000 x 20% inventory = 18,600 account through Finished Goods Inventory
E-Gadgets is a chain of electronics stores that specializes in devices and gadgets incorporating cutting-edge technologies. The company has more than 170 stores located in large cities throughout the Southeast and Midwest. E-Gadgets has chosen the locations of its stores so that most customers living in upper middle class and wealthy neighborhoods can get to an E-Gadgets store in less than 15 minutes. E-Gadgets is providing its customers with:
A)scrambled merchandising. B)allocative utility. C)place utility. D)saturation marketing.
Answer:
The correct option is C) place utility
Explanation:
Place utility is the utility which is created for a product by making that product available to near by locations of the customers so that they can easily get access to those products. Same strategy is being applied in the question by E-gadgets , who are making their stores available to such locations , where their customers ( upper middle class and wealthy neighborhoods) can get access to the products easily( less than 15 minutes in the given case).
A company's income statement showed the following: net income, $122,000; depreciation expense, $34,000; and gain on sale of plant assets, $8,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,200; merchandise inventory increased $22,000; prepaid expenses increased $7,000; accounts payable increased $4,200. Calculate the net cash provided or used by operating activities.
To calculate the net cash provided by operating activities, both the net income and adjustments for non-cash transactions and changes in working capital are considered. The companies net cash provided by operating activities is $133,400.
To calculate the net cash provided or used by operating activities in a company, we need to consider both net income and adjustments for non-cash transactions and changes in working capital.
In this company’s case, the net income is $122,000.
The adjustments for non-cash transactions include a depreciation expense of $34,000 (which increases net cash flow because it is a non-cash expense) and a gain on the sale of plant assets of $8,000 (which reduces net cash flow because it is a non-cash gain).
The changes in working capital are calculated by subtracting the increase in current assets and the decrease in current liabilities. Here, accounts receivable decreased by $10,200 (which increases cash flow), merchandise inventory increased by $22,000 (which decreases cash flow), prepaid expenses increased by $7,000 (which decreases cash flow), and accounts payable increased by $4,200 (which increases cash flow).
Combining all these factors, the calculation becomes:
Net income + Depreciation - Gain on Sale + Decrease in Accounts Receivable - Increase in Inventory - Increase in Prepaid Expenses + Increase in Accounts Payable
= $122,000 + $34,000 - $8,000 + $10,200 - $22,000 - $7,000 + $4,200 = $133,400
Therefore, the company’s net cash provided by operating activities amounts to $133,400.
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The difference between standard costs and budgeted costs is that standard cost refers to a single unit while budgeted costs refer to the cost, at standard, for the total number of budgeted units. is calculated under ideal conditions, while budgeted costs are calculated for attainable conditions. is calculated for raw material while budgeted costs are calculated for direct labor. is part of the management accounting system, while budgets are part of the financial accounting system.
Answer:
"While budgeted costs refer to the cost, at standard, for the total number of budgeted units. "
Explanation:
The first sentence would be the correct one
The budget consist of get the revenues and costs for the business using the standard measurement for one unit.
Please be more clear in future questions, thank you =)
Vocabulary Check. Choose the term within the parentheses that best matches each of the following descriptions. (LO1-1–LO1-7) a. Expenditure on research and development (financing decision / investment decision) b. A bank loan (real asset / financial asset) c. Listed on a stock exchange (closely held corporation / public corporation) d. Has limited liability (partnership / corporation) e. Responsible for bank relationships (the treasurer / the controller) f. Agency cost (the cost resulting from conflicts of interest between managers and shareholders / the amount charged by a company’s agents such as the auditors and lawyers)
Answer:
a. Investment decision b. financial asset c. Public corporation d. Corporation e. Treasurer f. the cost incurred from conflicts of interest between managers and shareholders
Explanation:
a. Expenditure on research and development will be categorized as an investment decision, as the return on this is not certain. Such investment may or may not increase productivity or find a new product line.
b. A bank loan is classified as a financial asset because it is a non physical, liquid asset. A real asset is a physical asset which has some intrinsic value, for instance, land, equipment etc.
c. A public corporation is a company owned by government whose shares are publicly traded, so if it's listed on stock exchange the company will be a public corporation.
d. In partnerships, the partners share profits and liability equally. While in the corporations there is limited liability.
e. The controller supervises over accountants and oversees the preparation of reports, auditing and accounting functions of a company. While the treasurer manages the external interactions, such as interactions with bankers, investors and share holders.
f. Agency cost is an internal expense. It arises when an agent acts on behalf of principal. It arises from core inefficiencies, for instance,it arises when interest of managers of the company and the shareholders is in conflict.
The terms 'investment decision,' 'financial asset,' 'public corporation,' 'corporation,' 'the treasurer,' and 'agency cost' are correct answers in the context of finance and business vocabulary related to decisions, assets, corporations, roles, and costs.
The vocabulary check for a student studying basic concepts in finance and business might look like this:
Expenditure on research and development is an investment decision because it concerns allocating company funds with the expectancy of future benefits.A bank loan is a type of financial asset for the bank since it represents an agreement that the bank will receive payments over time.A company that is listed on a stock exchange is a public corporation because its shares are available to the public.An entity that has limited liability implies that the owners are not personally liable for the company's debts, which is a characteristic of a corporation.The individual responsible for bank relationships and other financial matters in a corporation is the treasurer.Agency cost refers to the cost resulting from conflicts of interest between managers and shareholders, and not the fees paid to agents like auditors and lawyers.Financial Planning Partners Inc., employs 12 full-time CPAs and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2018: Budget Actual Indirect costs $300,000 $309,000 Annual salary of each attorney $118,000 $128,000 Annual salary of each paraprofessional $31,500 $32,500 Total professional labor-hours 50,000 dlh 56,000 dlh When using a normal costing system, year-end accounting records will show that indirect costs are __________.
Final answer:
Using a normal costing system, Financial Planning Partners Inc. will show that the year-end accounting records have applied $336,000 in indirect costs for the year after calculating the predetermined overhead rate and applying it to the actual direct labor hours worked.
Explanation:
To calculate the year-end accounting records for indirect costs using a normal costing system, we need to calculate the predetermined overhead rate (POR) and then apply it to the actual direct labor hours (dlh) worked during the year.
Step 1. Calculate the predetermined overhead rate:
Budgeted indirect costs: $300,000
Budgeted direct labor-hours: 50,000 dlh
Predetermined overhead rate (POR) = Budgeted indirect costs ÷ Budgeted direct labor-hours
POR = $300,000 ÷ 50,000 dlh
POR = $6 per dlh
Step 2. Apply the POR to the actual direct labor hours:
Actual direct labor-hours: 56,000 dlh
Applied indirect costs = POR × Actual dlh
Applied indirect costs = $6 per dlh × 56,000 dlh
Applied indirect costs = $336,000
Therefore, the year-end accounting records will show that the company applied $336,000 in indirect costs for the year.
Arts and Crafts Inc. will pay a dividend of $5 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 14%. What must be the expected growth rate of the company’s dividends?
Answer: 12.6 %
Explanation: The rate of growth that a company expects to maintain for a long term is called sustainable growth rate. It is denoted by G. Sustainable
growth rate helps the analysts to determine at what stage the company is in its life cycle.
.
FORMULA :-
GROWTH = Retention ratio * return on equity
= ( 1 - Dividend payout ratio) * return on equity
[tex]= (1-\frac{5}{50} \%) * 14 \%[/tex]
= 0.9 * 0.14
= 12.6 %
The expected growth rate of Arts and Crafts Inc.'s dividends is calculated using the Gordon Growth Model. Taking into account the current price of stock, the expected dividend, and the required rate of return, the growth rate comes out to be 4%.
Explanation:To find the expected growth rate of the company’s dividends, the formula to use is the Gordon Growth Model. This model is as follows:
P = D / (r - g)
Where:
P represents the price of the stock today ($50 in this case),
D represents the expected dividend ($5 in this case),
r represents the required rate of return (14% in this case), and
g represents the rate of growth.
First, rearrange the formula to solve for g:
g = r - (D / P)
Then you substitute the given numbers:
g = 0.14 - (5 / 50)
g = 0.14 - 0.10
g = 0.04, or 4%
So, the expected growth rate of Arts and Crafts Inc.'s dividends is 4%.
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Which of the following is NOT an activity used in the external environmental analysis process?a. Scanningb. Decryptingc. Monitoringd. Assessing
Answer: Option B
Explanation: Studying the external factors that influence the operations of the organization is called external environment analysis.
A. Scanning in external activity refers to identifying the threats and opportunities in the environment.
C. Monitoring refers to keeping track of external factors that can affect operations.
D. Assessing involves analyzing the current trends in various kinds of relevant factors such as political, economical etc.
.
Decrypting in simple words means decoding a data that has been saved in a code language. This is not a part of external environment analysis.
Decrypting is not an activity used in the external environmental analysis process; instead, scanning, monitoring, and assessing are the typical activities involved.
The external environmental analysis typically involves scanning the environment to identify early signals of potential changes in the environment, monitoring those changes over time to assess their impact, and assessing to determine the timing and importance of the changes for the organization's strategies and their management.
If there was no beginning retained earnings, net income of $30,300, and ending retained earnings of $8,000, how much were dividends?
Answer:
$22,300
Explanation:
Assuming that the net income that is stated here was after the payment of all debt obligations (e interest payment and preference share dividends) then this is all income that belongs to shareholders. This income can either be distributed as dividends or retained in the business for future projects and would increase the value of equity in the balance sheet.
Out of the $30,300 net income, if only $8,000 was retained this year then the implication is that the difference between $30,300 and $8,000 was payed out as dividends.
[tex]Dividends paid =$30,300-$8,000 = $22,800[/tex]
Final answer:
The dividends distributed were calculated to be $22,300, which is the difference between the net income of $30,300 and the ending retained earnings of $8,000.
Explanation:
If there was no beginning retained earnings and the net income is $30,300, with ending retained earnings being $8,000, the dividends paid can be calculated as follows:
Dividends = Beginning Retained Earnings + Net Income - Ending Retained Earnings
Since the beginning retained earnings are $0, we can simplify the equation to:
Dividends = $0 + $30,300 - $8,000
Dividends = $30,300 - $8,000
Dividends = $22,300
Therefore, the amount of dividends that were distributed is $22,300.
If a popular TV show on personal finance convinces more Americans about the importance of saving for retirement, the ________ curve for loanable funds would shift, driving the equilibrium interest rate ________.
Answer:
Supply curve for loanable funds would shift, leading to a fall in the equilibrium interest rate.
Explanation:
If the people are convinced that saving is important and start saving more, the supply of loanable funds will increase. As a result the supply curve will shift to the right. This shift in the supply curve will be accompanied with a decline in the equilibrium interest rate.
So, the correct answer is: supply; downwards.