Answer:
c. lump-sum amount
Explanation:
Lump-sum amount -
It refers to the one complete amount of money , is referred to as lump - sum amount .
A lump -sum investment ,. refers to the amount of money invested at one time .
Similarly ,
The returns can be lump - sum , where the person receives the complete amount at one go after maturation , is referred to as lump - sum amount .
Hence , from the given scenario of the question ,
The correct option is c. lump - sum amount .
The total cost of ownership (TCO) is an estimate of the cost of an item that includes all the costs related to the procurement and use of an item, but it does not include any of the costs related to disposing of the item after it is no longer useful.True / False.
Answer:
False.
Explanation:
The total cost of ownership can be defined as the acquisition cost of an asset and the cost of it's operation. It takes into account the total value of the asset. Before making a decision on the asset one wants to purchase, the total cost of ownership should be assessed. Most buyers make the mistake of only considering the purchase cost of an item without considering other operational and maintenance cost over the items useful life. For example, one might decide to pick a cheap alternative based on it's low purchase cost and later realize very hefty operation and maintenance cost. It is therefor prudent for buyers to consider not only the short-term cost which is the price but also the long-term cost that will be incurred over the item's useful life.
Most companies in business that want to purchase an equipment usually consider the total cost of ownership to determine the best alternative in terms of long-term value. By doing a total cost of ownership analysis, the company tends to have a holistic view of all the direct and indirect costs.
The fact that auditors should focus onmatters important to financial statements users based on the ollar amont that would influence lending or investment decisions is the concept of:_______________
Answer:
It is the concept of 'materiality'
Explanation:
The reason behind having the financial statements of a company getting audited by experienced accounting professionals, known as auditors, is to enhance the reliability of the statements for the different users of financial statements. These users can be regulators, lenders, shareholders, and potential investors among others. The important concept that auditors have to focus on is ensuring that the statements being audited comply with the relevant reporting standards and laws in all "material" aspects. The component of materiality is important.
Any deviation or mistatement is considered to be material if the size of this mistatement could potentially influence users of financial statements into making decisions that they would otherwise may not make had this omission or misstatement not occured. So, auditors need to identify what omissions or mistatements are material before having their opinions changed
Simon, the CEO of a consumer electronics firm, receives a huge positive response from the industry experts and consumers for introducing breakthrough technologies in the company’s products. Simon is a _____ leader.
Answer:
creative
Explanation:
He could either be a humble, extroverted, born or creative leader. From these options the most intuitive answer would be that he is a creative leader given that he has introduced "breakthrough technologies" in the companies products which would only be possible through a great amount of initiative and creativity.
The term "breakthrough technologies" is the key word in answering this question as it refers to innovation that has never been seen before. Thus, it would require a great deal of creativity to think of and successfully introduce and implement into a company.
The journal entry to issue 1,000,000 shares of $5 par common stock for $9 per share on July 2 would be _______.a. July 2Cash5,000,000 Common Stock5,000,000 b. July 2Cash9,000,000 Common Stock9,000,000 c. July 2Cash5,000,000 Paid-In Capital in Excess of Par—Common Stock4,000,000 Common Stock9,000,000 d. July 2Cash9,000,000 Common Stock5,000,000 Paid-In Capital in Excess of Par—Common Stock4,000,000
Answer:
d. July 2 Cash 9,000,000
Common Stock 5,000,000
Paid-In Capital in Excess of Par—Common Stock 4,000,000
Explanation:
Cash is debited with 9,000,000
Common Stock is credited with 5,000,000
and also Paid-In Capital in Excess of Par—Common Stock credited with 4,000,000
Preferred stock usually has a par value. Like common stock it can be sold at a price different from par. Preferred stock is recorded in its own separate contributed capital accounts.
The preferred stock accounts are included as a part of contributed capital.The entries for issuing preferred stock for non cash assets are similar to those for common stock.
In considering ending her relationship with her husband, Marie considers how they might divide up their household goods, and how it might impact their children and their friends. In interdependence theory terms, Marie is thinking about: A. comparison level. B. comparison level of alternatives. C. outcomes. D. investments.
Answer:
D) investment
Explanation:
Marie has decided to end her relation with her husband and considering how she can divide the household goods, how the end of the relationship impacts her children. By considering all this point, Marie is thinking about the investment.
Interdependence theory state that interpersonal relationships depend upon interdependence. it determine the how people interact each other and what will be the outcomes of their interaction.
During 20X1, the Balboa Software Company incurred development costs of $2,000,000 related to a new software project. Of this amount, $400,000 was incurred after technological feasibility was achieved. The project was completed in the middle of the year and the product was available for release to customers on July 1. Revenues from the sale of the new software in 20X1 were $500,000 and the company anticipated future additional revenues of $4,500,000. The economic life of the software is estimated at four years. What amount of the software development costs would be capitalized in 20X1 (ignore amortization)
Answer:
$400,000
Explanation:
Data provided in the question:
Development cost incurred = $2,000,000
Amount incurred after the technological feasibility was achieved = $400,000
Now,
The Software development costs that would be capitalized in 20X1
= Cost incurred after achievement of technological feasibility
= $400,000
The Balboa Software Company can capitalize $400,000 of its software development costs in 20X1. These are the costs incurred after the technological feasibility of the software was achieved. Other factors like revenues and economic life of the software are not relevant in this calculation.
Explanation:In the realm of accounting for software development costs, it's important to know the distinction between costs that can be capitalized and those that must be expensed. According to accounting standards, costs incurred after the technological feasibility of a software is established can be capitalized. Given the information in the question, Balboa Software Company incurred $400,000 towards the software project after technological feasibility was established in 20X1. Thus, the amount of software development costs that would be capitalized in 20X1 is $400,000. Any costs incurred before this point must be reported as an expense. The anticipated revenues, completion date, availability of the product, and the software's economic life do not impact this calculation.
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When a firm is able to produce nonstandardized (distinctive) products for customers who value differentiated features more than they value low cost, the firm is successfully implementing: a. a differentiation strategy. b. a cost leadership strategy. c. an integrated cost leadership/differentiation strategy. d. . a single-product strategy.
Answer: (A) Differentiation strategy.
Explanation:
A differentiation strategy is one of the type of business strategy that helps in developing the various types of unique products and the services based on the customer requirements and actual needs.
The main objective of this strategy is that it distinguish the products in the business from the market competition. It is also known as the low cost providing strategy.
According to the given question, the company is basically implementing the differentiation strategy as the firm is producing the non-standardized products and the services for the customers.
Therefore, Option (A) is correct answer.
Organizations can utilize a(n) ________ as an internal corporate communication network that uses Internet technology to link company departments, employees, and databases. A. market intelligence system B. marketing decision support system (MDSS) C. intranet D. marketing information system (MIS) E. database
Answer:
The answer to this question is E.database.
Explanation:
Janice owns a firm that provides accounting services to a number of small businesses in the area. Her firm processes payroll, prepares quarterly payroll tax returns, and provides tax consulting services. Janice is a(n) _______ accountant.
Answer:
Janice is a public accountant
Explanation:
Public accounting refers to a business that provides its services to other firms at large. By Janice being the owner of such firm she is referred to an accountant that provides her services to the public and she can also be referred to as a certified public accountant
An organization in which there are a lot of formal rules, people are treated in animpersonal manner, jobs are carefully divided into specialized tasks, and employees must check with their supervisors before making decisions, hence feeling micromanaged, exemplifies:1. Theory X organization2. scientific management theory3. the application of a human relations approach4. contingency management theory
Answer:
Theory X organization
Explanation:
McGregor defined it as this: an organization whose approach tend to have several strata of managers and supervisors to oversee and direct workers. A place where Authority is rarely delegated, and control remains firmly centralized. Managers are authoritarian and actively intervene to get things done.
A high efficiency rating indicates that the sample information is almost as good as perfect information. Group of answer choices True False
Answer:
True
Explanation:
The higher is the rating of the sample the more is the efficiency of the sample and its performance is measured by the good sample of information as the perfect information and indicates the effectiveness of the sample.In preparing financial statements, accountants should consider all of the following except: a. The objectives of financial reporting. b. The characteristics that make accounting information useful. c. The most useful way to display the information found on the financial statements. d. The presentation of the value of a company.
Final answer:
In financial statement preparation, accountants do not consider the presentation of the value of a company, which is more relevant to analysts and valuation experts. They focus on the objectives of financial reporting, the characteristics that make information useful, and displaying information in a useful way for investors like bondholders and shareholders.
Explanation:
In preparing financial statements, accountants should consider a range of factors to ensure that the information presented is useful for decision-making. However, not all aspects are relevant to the preparation of these statements. Specifically, the option that is not typically a consideration for accountants is d. The presentation of the value of a company. While the value of a company can be influenced by the information found in financial statements, it is not the direct responsibility of accountants to present this valuation within the statements, as this is usually the domain of analysts and valuation experts.
Accountants focus primarily on:
a. The objectives of financial reporting, which aim to provide information that is useful to current and potential investors, lenders, and other creditors in making decisions about providing resources to the entity.b. The characteristics that make accounting information useful, such as relevance and faithful representation, which help ensure that the financial information meets the needs of users.c. The most useful way to display the information found on the financial statements, which encompasses the organization and clarity of the data presented, helping users understand the financial performance and position of the company.As a firm becomes established, the personal knowledge of individual managers and their plans becomes less critical for outside investors like bondholders and shareholders. They rely more heavily on the available financial information when deciding to provide financial capital to the firm. Accountants serve these investors by focusing on providing transparent and accurate financial reporting, rather than personal assessments of value.
According to the law of demand, as prices rise, ceteris paribus A. quantity demanded decreases. B. quantity demanded increases. C. demand increases. D. demand decreases.
Answer:
A) quantity demanded decreases.
Explanation:
The law of demand states that as the price of a good or service increases, the quantity demanded (not the demand) of the good or service will decrease. This happens because less consumers are willing to purchase the goods or services and since the supply doesn't change, overstocking will result, which will decrease the equilibrium price.
*The demand of a good or service is shown by the demand curve, but the points in the curve represent the quantity demanded.
Answer:
A. Decreases
Explanation:
decreases.
increases.
stays the same.
disappears.
Jenna Newbury began a music business in July 2018. Newbury prepares monthly financial statements and uses the accrual basis of accounting. The following transactions are Newbury Company's only activities during July through October: Jul 14 Bought music on account for $ 65, with payment to the supplier due in 90 days. Aug 3 Performed a job on account for Alanna Turner for $ 55, collectible from her in 30 days. Used up all the music purchased on July 14. Sep 16 Collected the $ 55 receivable from Turner. Oct 22 Paid the $ 65 owed to the supplier from the July 14 transaction. If Newbury Company uses the cash basis of accounting instead of the accrual basis, in what month will Newbury report revenue and in what month will it report expense?
Answer:
A revenue for 55 ollars with be recognize on Sep 16th
An expense of $65 will be be recognize on october 22th
Explanation:
Under cash the company will only consider the cash inflwo and disbursement as the object to recognize gain/losses.
Revenues:
55 for collected sales on September 16th
Expenses:
65 payment to suplliers October 22th
If Newbury Company uses the cash basis of accounting, revenue and expense will be reported in different months.
Explanation:If Newbury Company uses the cash basis of accounting instead of the accrual basis, it will report revenue and expense in the same month when cash is received or paid. Using the cash basis, revenue will be reported in September when the $55 receivable from Alanna Turner is collected. Expense will be reported in October when the $65 owed to the supplier is paid.
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Based on an annual disposable income of $40,000, calculate the average amount o money a person would save in japan; in the united states; in france.
Answer:
Japan $760
The United States $1,600
France $6,320
Explanation:
Total personal revenue is the disposable income less personal taxes. Employee earnings minus employee actual taxes in terms of national reports reflect net established income.
The household saving rate is specified as total saving divided by disposable income.
Household saving = Disposable income * Households saving rate
Japan:
$40,000*1.9% = $760
United States :
$40,000*4% = $1,600
France :
$40,000*15.8% = $6,320
The amount people would save on average is:
$760 in Japan $1,600 in the U.S. $6,320 in France.The average savings rate in a country is indicative of the living expenses that people in that country have to incur. A lower savings rate therefore means that there are more expenses.
The average savings can be calculated by multiplying the disposable income by the average savings rate.
In Japan, the average amount saved in a year is:
= 40,000 * 1.9%
= $760
In the United States:
= 40,000 * 4%
= $1,600
In France:
= 40,000 * 15.8%
= $6,320
In conclusion, we can say that people in France incur less expenses on average.
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Discuss what happens to the equilibrium price and quantity of Colgate Toothpaste when there is an increase in the demand for Colgate Toothpaste but no change in the supply. What could cause an increase in the demand for Colgate Toothpaste but no change in supply?
Answer:
The demand of a product may increase due to several factors, including a decrease in the product's price, an increase in the price of the competition (substitute products), a decrease in the price of complement, or an increase in consumer income.
The company can only control the price they charge for the product, but they do not control the other external factors. If the supplier is able to increase the quantity supplied, the equilibrium price might not vary at least in the short run. If the external factors continue then the equilibrium will probably increase.
If the quantity demanded for Colgate increases, but the supplier is not able to increase the quantity supplied, then the equilibrium price will increase due to a shortage of the product.
If a firm sells 40,000 units and the contribution margin on the firm's single product is $4.00 per unit and fixed costs are $60,000, what will the firm's operating profit be at this level of sales volume?
Answer:
=$100,000
Explanation:
Contribution margin equals to sales - variable cost.
It means the contribution margin has accounted for variable costs.
The total contribution margin, in this case, will be contribution margin per item multiplied by total units sold.
=40,000 units x 4
=$160,000
Operating income = Total contribution margin - fixed costs
=$160,000 - $60,000
=$100,000
Final answer:
The firm's operating profit at a sales volume of 40,000 units, with a contribution margin of $4.00 per unit and fixed costs of $60,000, is $100,000.
Explanation:
To calculate the firm's operating profit using the given sales volume and contribution margin, we need to multiply the number of units sold by the contribution margin per unit, then subtract the fixed costs from the result. In this case, the calculation is as follows:
Number of units sold = 40,000 units
Contribution margin per unit = $4.00
Fixed costs = $60,000
Operating profit = (Number of units sold imes Contribution margin per unit)
- Fixed costs
Operating profit = (40,000 units imes $4.00) - $60,000
Operating profit = $160,000 - $60,000
Operating profit = $100,000
Therefore, the firm's operating profit at this sales volume is $100,000.
A binding price ceiling...
(i)causes a surplus
(ii)causes a shortage
(iii)is set at a price above the equilibrium price.
(iv)is set at a price below the equilibrium price.
a) (ii) only
b) (iv) only
c) (i) and (iii) only
d) (ii) and (iv) only
Answer:
d) (ii) and (iv) only
Explanation:
A price ceiling is usually set by the government or an agency of the government. A price ceiling limits how high producers can sell their product. It sets the maximum price that can be charged for a good or service.
For a price ceiling to be effective, price has to be set below equilibrium price.
Because price is less than equilibrium price, the profits of producers would fall and producers would reduce supply. This would lead to an excess of demand over supply. This is known as a shortage.
I hope my answer helps you
A binding price ceiling leads to a shortage by setting the price of a good or service below the equilibrium price, as it increases demand and reduces supply.
Explanation:A binding price ceiling is an imposed limit on the price of a good or service that is set below the equilibrium price. This artificial capping of the price restricts the price from reaching the level where supply equals demand. As a consequence, at this ceiling price, more consumers want to buy the good than what is available, leading to a shortage. The quantity demanded increases because the good becomes cheaper, while the quantity supplied decreases, as suppliers are not willing to sell as much at the lower price.
Therefore, the correct answer to the question is: 'A binding price ceiling causes a shortage and is set at a price below the equilibrium price.' This corresponds to option (d) (ii) and (iv) only.
Today, establishing long-term, mutually beneficial arrangements in which both the buyer and seller focus on value enhancement through the creation of more satisfying exchanges is known as __________.
Answer: Relationship marketing
Explanation:
The relationship marketing is one of the type of business strategy that helps in developing the various types of long term business opportunity by interacting with the customer and also fulfill the actual requirement of the customers.
The main objective of the relationship marketing is that it helps in developing the strong connection with the consumers and promoting the products and the services to the users.
According to the given question, the relationship marketing is the helps in establishing the long term opportunities in which both the seller and the buyers are focus on the value enhancement process.
Therefore, Relationship marketing is the correct answer.
The five-dollar Burger Joint gift card that your friend gave you for your birthday expires today. You can either use the gift card to buy yourself dinner at Burger Joint, or you can stay home and eat a delicious home-cooked meal. What is the opportunity cost of eating the home-cooked meal?a. The value of a five-dollar dinner at Burger Joint.
b. The value of the ingredients that go into the home-cooked meal and the value of a five-dollar dinner at Burger Joint .
c. There is no opportunity cost since you did not pay for the gift card.
d. The time it takes to eat your home-cooked meal and the value of the five-dollar dinner at Burger Joint.
e. The value of the ingredients that go into the home-cooked meal.
Answer:
The correct answer is option b.
Explanation:
The opportunity cost of an economic decision can be defined as the cost of giving up the second-best alternative. A person received a five-dollar burger joint gift card that expires today.
The person has to choose between eating out at a burger joint or having a home-cooked meal. If the person eats a home-cooked meal, he has to give up the five-dollar worth gift card. Also, the ingredients that he used in the meal could have been used later for something else.
The economy is in short-run equilibrium when __________. a. aggregate demand intersects short-run aggregate supply. b. short-run aggregate supply intersects long-run aggregate supply. c. aggregate demand intersects long-run aggregate supply. d. aggregate demand intersects both long-run and short-run aggregate supply. e. the economy is at full-employment output.
Answer:
A. aggregate demand intersects short-run aggregate supply
Explanation:
Short run occurs when the amount a firm wishes to supply is equal to the amount demanded from the consumers. It is the area on the graph where the aggregate demand curve intersect with the short run supply curve.
Or, simply put, when the aggregate output supplied is equal to the aggregate output demanded. The equilibrium is made up of equilibrium prices and quantity.
Short-run equilibrium in the economy occurs when the aggregate demand curve intersects with the short-run aggregate supply curve.
The economy is in short-run equilibrium when aggregate demand intersects short-run aggregate supply. This intersection determines equilibrium real GDP and the price level in the short run. In contrast, the intersection of aggregate demand and long-run aggregate supply determines the long-run equilibrium, which corresponds to the economy's potential level of output. The short-run equilibrium can see output levels both below and above potential due to nominal wage and price stickiness. Over time, the economy may adjust to reach long-run equilibrium where full wage and price flexibility is achieved.
ACME Corp. managers lack the will and resources to develop international marketing strategies but are happy when their company's products are purchased by a(n) _______, which then sells them internationally.
Answer: Trading company.
Explanation:
Trading companies are companies that act as the middlemen in a trade helping to connect the buyer of a product to the seller. Trading companies can perform trade of a product within a country and can also export products to consumers in foreign countries. ACME Corp. products can easily be sold internationally by trading companies.
In 2004, TimeNow Corporation had fixed assets of $1,345, current assets of $260, current liabilities of $180 and shareholders' equity of $775. What was the net working capital for TimeNow in 2004?
Final answer:
The net working capital for Time Now Corporation in 2004 is calculated by subtracting current liabilities ($180) from current assets ($260), resulting in a net working capital of $80.
Explanation:
The student has asked for the calculation of net working capital for TimeNow Corporation in 2004. Net working capital is calculated by subtracting current liabilities from current assets. Hence, for Time Now Corporation:
Current Assets = $260Current Liabilities = $180Net Working Capital = Current Assets - Current Liabilities
Net Working Capital = $260 - $180
Net Working Capital = $80
Therefore, the net working capital for Time Now in 2004 was $80.
The net working capital for TimeNow Corporation in 2004 is calculated as $80.
Net working capital is a measure of a company's liquidity and operational efficiency. It represents the difference between a company's current assets (assets that are expected to be converted into cash or used up within one year) and its current liabilities (obligations due within one year).
In this case, we're given the following information for TimeNow Corporation in 2004:
Current Assets = $260Current Liabilities = $180To calculate the net working capital, we simply subtract the total current liabilities from the total current assets:
Net Working Capital = Current Assets - Current Liabilities
Substituting the given values:
Net Working Capital = $260 - $180Solving the equation:
Net Working Capital = $80This means that TimeNow Corporation had $80 more in current assets than it had in current liabilities in 2004. Positive net working capital indicates that a company has enough short-term assets to cover its short-term liabilities, which is generally considered a good sign of financial health and operational liquidity.
A commercial for a floor cleaner shows a young mother cleaning her kitchen floor after feeding her toddler. The commercial is considered to be effective because it utilizes high source similarity. This is an example of a _____ commercial.
Answer: This commercial is a slice of life
Explanation:
Slice of life can be defined as the representation of everyday life in the world of art and entertainment. In the case of the commercial, projecting a mother to clean the floor after feeding her baby is something that many young mothers can identify with. Cleaning the house and feeding a baby is something that many mothers do daily as part of their daily living routine, combining this with the use of this floor cleaner can make them feel identified with this aspect of their life and decide to buy the cleaner.
Many times this type of purchase is made due to what the product represents itself. While it is true that it can be a good floor cleaner (or perhaps the best) the young mother who is going to acquire it thinks about that young mother of the commercial and how she managed her life. A floor cleaner is a form of connection.
If demand decreases and supply increases, the direction of change in the equilibrium quantity is un-predictable unless the relative magnitudes of the demand and supply changes are known.
A) True
B) False
Answer:
The correct answer is option A.
Explanation:
A decrease in the demand for a product will cause the demand curve to shift to the left. At the same time, an increase in the supply of the product will cause the supply curve to shift to the right.
In such a situation the change in the equilibrium quantity cannot be predicted. It depends on the magnitude of change in demand and supply.
If the proportionate decrease in demand is more than the increase in the supply of the product, the equilibrium quantity will decrease.
If the increase in supply is more than the decrease in demand, the equilibrium quantity will increase.
If the proportionate increase in supply is equal to a proportionate decrease in demand, the equilibrium quantity will remain the same.
Argument or Nonargument
To focus on the performance of the stock market is to zero in on an economic indicator that can do well even as the country does poorly. In 2006, for instance, the Dow Jones industrial average hit highs. According to the just released census data, however, median earnings fell one percent, and millions more Americans entered the ranks of the uninsured. Indeed, from 2000 to 2007 the S&P 500 gained more than 500 points. Meanwhile, the median household income fell by more than $900.
Final answer:
The statement is an argument as it presents a claim with supporting evidence. It argues that stock market indices like the Dow Jones and S&P 500 do not necessarily reflect the overall economic conditions. These indices track the stock performance of large U.S. companies and show general market trends.
Explanation:
When considering whether the provided statement constitutes an argument or a nonargument, we can see it presents a claim and supports it with evidence—hence, it is an argument. The claim is that the stock market's performance (as indicated by benchmarks like the Dow Jones Industrial Average and the S&P 500) does not necessarily reflect the overall health of the economy. The evidence provided includes the contrast between the stock market's highs and specific data points indicative of economic challenges faced by the population such as decreases in median earnings and increases in the number of uninsured Americans.
The significant performance indices mentioned - the Dow Jones Industrial Average and the S&P 500 are crucial metrics in tracking stock market performance. The Dow Jones is a price-weighted average of 30 large industrial stocks, while the S&P 500 is a weighted average of the market capitalization of 500 large firms. Both of these indices provide insights into stock market trends, which generally incline upwards over time despite experiencing significant fluctuations.
Classify the following items as (1) prepaid expense, (2) unearned revenue, (3) accrued revenue, or (4) accrued expense: a. Cash received for use of land next month b. Fees earned but not received in cash c. Wages owed but not yet paid d. Supplies on hand
Answer:
a. Unearned Revenue; b. Accrued Revenue; c. Accrued Expense; d. Prepaid Expense
Explanation:
Prepaid Expenses : Expenses paid before due
Unearned Revenue : Revenue earned before due i.e Advance Income
Accrued Revenue : Revenue earned i.e due , but not received
Accrued Expense : Expense due but not paid i.e Outstanding Expense
a. Cash received for use of land next month = Unearned Revenue or Advance Income
b. Fees earned but not received in cash = Accrued Revenue / Accrued Income
c. Wages owed but not yet paid = Accrued Expense / Outstanding Expense
d. Supplies on Hand = Prepaid Expense
Cash received for use of land next month is unearned revenue, fees earned but not received in cash is accrued revenue, wages owed but not yet paid is accrued expense, and supplies on hand is prepaid expense.
Explanation:The items can be classified as -
a. Cash received for use of land next month is classified as unearned revenue. This is because the land has not yet been used, and the revenue is considered unearned until the service (use of land) is provided.
b. Fees earned but not received in cash are classified as accrued revenue. This is because the fees have been earned, but the cash has not yet been received.
c. Wages owed but not yet paid are classified as accrued expense. This is because the expense has been incurred but not yet paid.
d. Supplies on hand is classified as prepaid expense. This is because the supplies have been paid for in advance but have not yet been used.
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Evan has received permission from his state to form a corporation for his startup, expecting his liability would be limited to the amount of his investment. But his bank asked him to assume personal liability before it would grant him a business loan. Why would the bank make this demand?
Answer:
Evan's business has no credit history.
Explanation:
As Evan has just created the company, it has no record about its ability to pay debt which is important for a bank to give a loan and it will not be willing to approve it if the company has no credit history that shows that it can make the payments. Because of that, it will require Evan to assume personal liability in order to have a guarantee that the loan would be paid back.
Eric wants to invest in government securities that promise to pay $1,000 at maturity. The opportunity cost (interest rate) of holding the security is 5.40%. Assuming that both investments have equal risk and Eric’s investment time horizon is flexible, which of the following investment options will exhibit the lower price?A: an investment that matures in 10 years?B: an investment that matures in 9 years
To determine which investment option will exhibit the lower price, we need to calculate the present value of each investment option using the given interest rate. Option A, which matures in 10 years, has a lower price compared to Option B, which matures in 9 years.
Explanation:To determine which investment option will exhibit the lower price, we need to consider the concept of present value. The present value of an investment is the current worth of its future cash flows, discounted at the given interest rate. The lower the interest rate, the higher the present value. Using the formula for present value, we can calculate the present value of each investment option and compare them to determine which has a lower price.
For Option A, which matures in 10 years, the present value can be calculated as: PV = $1,000 / (1 + 0.054)^10 = $1,000 / 1.747422051 = $571.85.For Option B, which matures in 9 years, the present value can be calculated as: PV = $1,000 / (1 + 0.054)^9 = $1,000 / 1.646389638 = $607.70.Therefore, Option A has a lower price than Option B, with a present value of $571.85 compared to $607.70 for Option B.
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Melanie has a choice of driving or flying from Durham, North Carolina to Knoxville, Tennessee for a one-day business trip. If she travels by air, she will be able to work seven hours in Knoxville, while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in Knoxville is $40. If Melanie a rational decision maker, she will chose to fly if and only if the price differential (air cost minus driving cost) is less than
a. $40.
b. $120.
c. $160.
d. $280.
Answer:
Correct option is (b)
Explanation:
Time available for work if Melanie chooses to travel by air = 7 hours
Income per hour = $40
Total income earned if chooses to travel by air = 40 × 7 = $280
Time available for work if Melanie chooses to drive = 4 hours
Total income earned if chooses to drive = 40 × 4 = $160
Price differential = 280 - 160 = $120
As a rational decision maker, Melanie will choose to fly over drive only if her price differential is below $120. She will choose to drive if price differential is above $120.
Melanie should choose to fly if the price differential is less than $120.
Explanation:The Question:Melanie has a choice of driving or flying from Durham, North Carolina to Knoxville, Tennessee for a one-day business trip. If she travels by air, she will be able to work seven hours in Knoxville, while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in Knoxville is $40.
To determine the price differential at which Melanie would choose to fly, we need to consider her income from working and the cost of each mode of transportation:
- If she flies, she can work for 7 hours, earning a total of $280 (7 hours * $40/hour income).
- If she drives, she can only work for 4 hours, earning a total of $160 (4 hours * $40/hour income).
Therefore, the price differential should be less than $120 for Melanie to choose to fly (her income from flying subtracted by her income from driving): $280 - $160 = $120.
The Answer:The correct answer is b. $120.
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