Answer: Kim-Lord model
Explanation: Some purchases made by consumers require a high degree of involvement such as cars, mobile phones etc on both cognitive and affective levels. Others do not. This phenomenon is explained by the Kim-Lord grid model of cognitive response from highly effective advertisements. The model states that purchase related decisions of consumers are based on or is highly influenced by affective and cognitive factors and that all aspects of advertising should be focused on these areas.
true or false An agent may continue to represent the principal even after the agency relationship is terminated.
Answer:
False
Explanation:
Agency refers to a kind of agreement wherein the first party, known as the Principal confers a right on the second party, called an agent, to act on his behalf or as per his directions.
It establishes a fiduciary responsibility i.e that of a legal trust between the parties.
Once the agency agreement is terminated, the relationship between a principal and an agent ceases. Thereafter, the agent cannot continue representing the principal and if he does, he shall be held personally liable for such acts which result into any damage or loss to a third party.
Old Economy Traders opened an account to buy 1,000 shares of Internet Dreams at $40 per share. The initial margin requirement was 50%, and interest on margin loan is 8%. A year later, the price of Internet Dreams has risen from $40 to $50, what is Old Economy Traders' return on equity?
Answer
6000 (representing a decrease in the OET account)
Explanation:
The initial margin was $40 x 1000 x 0.50 = $20,000
As a result of the $10 increase in the stock price, the Old Economy Trader loses $10 x 1000 shares = $10,000
Now, considering the fact that an interest margin of %8 was paid on the load, we therefore arrive at:
$4 (representing %8 of $50) x 1000 = $4000
Old Economy Trader return on equity will now therefore be:
20000 - 10000 - 4000
= 6000 (representing a decrease in the OET account.)
For further clarity, we try break it down further
To sell the shares, the OET had to pay 50% of their market value and
thus the value of total assets in OET’s account is initially $40, 000 + $20, 000 = $60, 000. At the time of the sale, total liabilities are $40,000 and thus OET’s margin is initially $60, 000 − $40, 000 = $20, 000.
Which of the following statements is true? A. The equilibrium price after a specific tax will be the same whether the tax is collected from consumers or producers. B. The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers. C. The tax incidence on consumers will be higher if the tax is collected from consumers. D. The tax incidence on producers will be higher if the tax is collected from producers.
Answer:
The correct answer is A. The equilibrium price after a specific tax will be the same whether the tax is collected from consumers or producers.
Explanation:
Without tax the equilibrium price will be placed in Pe and the equilibrium amount will be Qe.
Once a tax has been applied, the price paid by consumers will be Pc and the price received by producers Pp. The price of consumers will be equal to the price of the producers plus the cost of the tax. Since consumers will buy less at the Pc price and producers will sell less in Pp, the quantity sold goes from Qe to Qt.
The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers.
Explanation:The correct statement is B. The equilibrium price after a specific tax will depend on whether the tax is collected from consumers or producers.
When a tax is imposed on a good, it affects the supply and demand of that good, leading to changes in the equilibrium price and quantity.
If the tax is collected from consumers, the demand curve shifts downward, resulting in a higher equilibrium price. If the tax is collected from producers, the supply curve shifts upward, resulting in a lower equilibrium price.
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A new technological breakthrough increases production for an industry and shifts the supply curve to the right. If the firm ________, then the firm will likely be happy about this new technology.
a. produces products that are considered inelastic
b. produces products because consumer will buy less
c. produces products that are considered elastic Next
Answer:
The correct answer is letter "C": produces products that are considered elastic.
Explanation:
Elasticity refers to the sensitivity of a good or service to reflect change in its supply or demand after a change in price. A product's supply is said to be elastic if the changes in the quantity supplied increases and it immediately determines a price in the price.
Thus, if for technological reasons the output of a company increases, considering that the product is elastic, the prices will increases which will provide the organization more revenue. That firm will be more than glad about the technological advance.
Final answer:
A firm will likely be happy with a technological breakthrough that increases production if it a) produces products that are considered inelastic, as this leads to a larger quantity sold without significantly reducing the price.
Explanation:
A technological breakthrough that increases production and shifts the supply curve to the right will be particularly beneficial to a firm if it produces products that are considered elastic. When the supply increases for elastic products, consumers are more responsive to the change in price, resulting in a substantially larger quantity being sold. This can greatly increase the total revenue for a firm as the technological breakthrough allows the firm to produce at a lower cost while selling more units due to the elastic nature of demand.
a. produces products that are considered inelastic.
Considering the example of the production of aspirin, if demand is highly inelastic, then a rightward shift in the supply curve from S0 to S1 leads to a lower price but not a substantial change in the quantity sold. This situation would benefit consumers in terms of price. However, if the demand is highly elastic as in the same shift in supply leads to the sale of a much greater quantity at a price very close to the original, resulting in increased consumer and producer benefits.
In autarky, when a country maximizes its utility, its consumption point is(a)below the production possibility frontier.(b)on the production possibility frontier.(c)above the production possibility frontier.(d)cannot tell without more information.
Answer:
(d)cannot tell without more information.
Explanation:
Autarkic economy is a self reliant economy, consuming entirely from its own production.
An autarkic economy maximises its utility when : Its PPF & Social Indifference Curve are tangent to each other.
PPF is sort of a budget constraint to economy, because it denotes maximum production potential with given resources & technology. Social Indifference Curve is the curve denoting product combinations yielding same level of social satisfaction.Their tangency gives utility maximising point with the available resources & technology.
Other options are inapt because: Production on PPF is a necessary but not sufficient condition for social utility maximisation (tangency also needed). Production under PPF reflects under utilisation of resources, cant be utility maximising. Production above PPF is unattainable.
In 2004, the poverty threshold for a family of four was Select one: a. $18,244 b. $19,157 c. $20,125 d. $21,765
Answer:
b. $19,157
Explanation:
Poverty refers to a situation wherein an individual is unable to satisfy even his basic necessities of food and shelter.
Poverty threshold refers to a measure to assess the number of individuals who are below the minimum threshold limit fixed.
Poverty threshold is calculated taking into account, the minimum diet requirements of an individual, and is expressed in monetary terms i.e US Dollars. Those who earn less than the threshold limit shall be termed as poverty ridden or simply poor.
The poverty threshold limit for a family of four was fixed at $19157 in the year 2004.
a. Suppose that there are equal numbers of good and bad used cars in the market and that good used cars are worth $13,000 while bad used cars are worth $5,000. What is the average value of a used car?
The average value of a used car is calculated as $9,000 when there is an equal number of good and bad used cars valued at $13,000 and $5,000 respectively, taking into account the market's asymmetric information.
When there are equal numbers of good and bad used cars in the market, and good used cars are worth $13,000 while bad used cars are worth $5,000, the average value of a used car can be calculated by taking the mean of these two values. By adding the value of a good used car and a bad used car together, $13,000 + $5,000 = $18,000, and then dividing by the number of car types, which is 2, we find that the average value of a used car is $9,000. This represents what a buyer might expect to pay on average, given the asymmetric information inherent in used car markets, often described in the economic model of used cars. The discussion of adverse selection becomes vital in understanding the discrepancy between the true qualities and the observed qualities of used cars in such markets.
A country produces apples and wheat. 1.) Using the 3-point curved line drawing tool, draw a representative PPC for this country. Label it PPC 1. 2.) Suppose that a breakthrough in technology makes all agriculture more productive. Using the 3-point curved line drawing tool, draw a new PPC showing the effect of this change. Label it PPC2. Carefully follow the instructions above, and only draw the required objects.
Answer:
The initial PPC is drawn on basis of the supposed values and is labelled as PPC1 in the attached graph. On technological marvel, the production of both the products(apples and wheat) will increase and the PPC will shift towards right as indicated in the graph labelled as PPC2.
Explanation:
1-Using the 3 point curved line tool, the representative PPC is drawn such that a the overall production is in the form of an arc touching both the axes. This is labeled as PPC in the attached graph.
2- When a breakthrough in the technology makes the agriculture productive, the curve will shift towards right. This indicates the production of both apples and wheat will increase. This is labeled as PPC2 in the attached graph.
A Production Possibility Curve (PPC) is depicted as a downward sloping concave line representing trade-offs in the production of two goods, in this case, apples and wheat. A technological breakthrough shifts this curve outward, reflecting increased production capacity.
Explanation:The subject of this question is the Production Possibility Curve (PPC), which is an economic model illustrating trade-offs and efficiency in production. In this case, we're looking at a country that produces only two goods: apples and wheat.
Normally, a Production Possibility Curve is drawn as a downward sloping, concave line, indicating the trade-off between the production of apples and wheat. The PPC is labeled as PPC 1.
When a technological breakthrough in agriculture occurs, this increases the productivity of both goods. This change shifts the PPC outward, resulting in a new curve labeled as PPC 2. This reflects the increase in production capability for both apples and wheat.
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When GM introduced the Chevy Nova in South America, it was perplexed to find that, despite its best efforts, it wasn't selling many cars. GM finally realized that "nova" in Spanish means "it won't go." This is an example of a(n) _______ force that adversely affected GM in its globalization effort
Answer:
The correct word for the blank space is: Sociocultural.
Explanation:
Sociocultural forces refer to all cultural features a society possesses such as language, values, and customs. In business, sociocultural features can be an opportunity or a threat firms must identify while promoting or introducing a product into a foreign market. Companies must make sure that the introduction of those goods or services is as smooth as possible for the association to achieve its goals.
Which of the following statements is FALSE?a. Electronic procurement systems can aid a company in saving both time and money.b. More than 50% of each sales dollar typically goes towards covering supply chain costs.c. If a firm lacks the technology to make a required component they will need to consider buying/outsourcing.d. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Answer:
The answer is d. Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.
Explanation:
Centralized purchasing is a purchasing system in which all the departments of a company with a wide geographical distribution can make purchases through a common purchasing organization.
The false statement is that centralized purchasing refers to individual, local purchasing departments making their own decisions. In fact, centralized purchasing means the decisions are made by a single, centralized department.
Explanation:The false statement among the options is: 'Centralized purchasing is where individual, local purchasing departments, such as at the plant level, make their own purchasing decisions.' This is incorrect. Centralized purchasing refers to all purchasing decisions and activities being carried out by a single, centralized department within an organization rather than on an individual or local level. For example, in a multinational corporation, the headquarters would make purchasing decisions that affect all branches, ensuring standardized processes and potential volume discounts.
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Cazden Motors' stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price of $25 and some with a strike price of $35. Both options expire in three months. Which of the following best describes the value of these options?
a. The options with the $25 strike price will sell for less than the options with the $35 strike price.
b. The options with the $25 strike price have an exercise value greater than $5.
c. The options with the $35 strike price have an exercise value greater than $0.
d. If Cazden's stock price rose by $5, the exercise value of the options with the $25 strike price would also increase by $5.
e. The options with the $25 strike price will sell for $5.
Answer:
d. If Cazden's stock price rose by $5, the exercise value of the options with $25 strike price would also increase by $5.
Explanation:
A call option confers a right, not an obligation upon the call buyer to buy a security at a pre determined price, known as exercise price or strike price at a future date.
A call buyer would exercise his right only in the scenarios wherein the strike price is lesser than the current market price on maturity.
Profit of a call buyer is given by = CMP as on expiry - Exercise/Strike price - Option premium paid
wherein CMP= Current Market Price
A call option is "in the money" when it's strike price is less than it's current market price. In the given case, it means if the CMP today represents CMP upon expiry, call buyer would exercise his right and his gain would be $5 i.e $30 - $25.
Since the $25 exercise option is "in the money", an increase in stock price by $5 will also increase the strike price by $5.
A delivery van costing $37,000 is expected to have a $2,900 salvage value at the end of its useful life of five years. Assume that the truck was purchased on January 1. Compute the deprecation expense for the first two calendar years under the following deprecation methods. A. Straight Line B. Double-declining- balance
Answer:
A.
Depreciation expense for the first year: $6,820
Depreciation expense for the second year: $6,820
B.
Depreciation expense for the first year: $13,640
Depreciation expense for the second year: $8,184
Explanation:
A. The company uses straight-line depreciation method, Depreciation Expense each year is calculated by following formula:
Annual Depreciation Expense = (Cost of delivery van − Salvage Value )/Useful Life = ($37,000 - $2,900)/5 = $6,820
Depreciation expense for the first year: $6,820
Depreciation expense for the second year: $6,820
B. The company uses Double-declining- balance method
Under the straight-line method, useful life is 5 years, so the asset's annual depreciation will be 20% of the Depreciable cost.
Depreciable cost = Total asset cost - salvage value = $37,000 - $2,900 = $34,100
Under the double-declining-balance method the 20% straight line rate is doubled to 40% - multiplied times the Depreciable cost's book value at the beginning of the year.
Depreciation expense for the first year = $34,100 x 40% = $13,640
At the beginning of second year, the Depreciable cost's book value is $34,100-$13,640 = $20,460
Depreciation expense for the second year = $20,460 x 40% = $8,184
The depreciation expense for the first two calendar years is $6,220 under the straight line method and $14,800 and $8,880 under the double-declining balance method.
Explanation:Under the straight-line method, the deprecation expense is calculated by dividing the difference between the initial cost and salvage value by the useful life. For the first two years, the deprecation expense would be:
Year 1: ($37,000 - $2,900)/5 = $6,220Year 2: ($37,000 - $2,900)/5 = $6,220Under the double-declining balance method, the deprecation expense is calculated by applying a fixed rate to the carrying value of the asset. The carrying value is the initial cost minus accumulated deprecation. The deprecation rates for the first two years would be:
Year 1: (2/5) x ($37,000 - $0) = $14,800Year 2: (2/5) x ($37,000 - $14,800) = $8,880Learn more about Deprecation Methods here:https://brainly.com/question/34866982
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At the beginning of 2010, Stevens Co. had a balance of $100,000 in Retained Earnings. During 2010 the company paid a dividend of $1,000 and had a net income of $12,000.
What should be the balance in Retained Earnings on 12/31/10?
Answer:
Balance in retained earning will be $111000
Explanation:
We have given at the beginning retained earning is $100000
Dividend paid by the company is $1000
Net income = $12000
We have to find the balance in retained earning at the end
Balance in retained earning at the end will be equal to
Retained earning at the end = Beginning retained earning + net income - dividend = $10000 + $12000 - $1000 = $111000
So balance in retained earning will be $111000
Which of the following is an assumption of CVP analysis? A. When graphed, total costs curve upward. B. The unitminus−selling price is variable as it is subject to demand and supply. C. Total costs can be divided into inventoriable and period costs with respect to the level of output. D. Total costs can be divided into a fixed component and a component that is variable with respect to the level of output.
Answer:
The answer is D
Explanation
Cost-volume-profit analysis (CVP analysis) helps a business in planning and decision-making.
It provides information regarding changes in profits and costs brought about by changes in volume or level of activity. Assumptions include; costscan be divided into fixed and variable component, inventory level does not change from from period to period, selling price is constant
Ginger Enterprises began the year with total assets of $500,000 and total liabilities of $250,000.
Using this information and the accounting equation, answer each of the following independent questions.
1. What was the amount of Ginger's owners' equity at the beginning of the year?
2.If Ginger's total assets increased by $100,000 and its total liabilities increased by $77,000 during the year, what was the amount of Ginger's owners' equity at the end of the year?
3.If Ginger's total liabilities increased by $33,000 and its owners' equity decreased by $58,000 during the year, what was the amount of its total assets at the end of the year?
4. If Ginger's total assets doubled to $1,000,000 and its owners' equity remained the same during the year, what was the amount of its total liabilities at the end of the year?
Answer:
1. $250,000
2. $273,000
3. $455,000
4. $750,000
Explanation:
We know that
Accounting equation is
Total assets = Total liabilities + Shareholder equity
1. The equity would be
= $500,000 - $250,000
= $250,000
2. The equity would be
Total assets = $500,000 + $100,000 = $600,000
Total liabilities = $250,000 + $77,000 = $327,000
So, the equity is
= $600,000 - $327,000
= $273,000
3. Total assets
Total liabilities = $250,000 + $33,000 = $263,000
Owner equity = $250,000 - $58,000
= $192,000
So, the total assets is
= $263,000 + $192,000
= $455,000
4. Total liabilities equal to
= $1,000,000 - $250,000
= $750,000
Walter Shewhart is listed among the important people of operations management because of his contributions to: A. assembly line production. B. measuring productivity in the service sector. C. information technology. D. just-in-time inventory methods. E. statistical quality control.
Answer:
E. statistical quality control.
Explanation:
Shewhart has contributed his great services towards Quality control through valuable research and its results, lectures and by publishing highly informative books. He also worked as a fellow member in American Statistical Association and International Statistical Institute.
Therefore, Walter Shewhart is listed among the important people of operations management because of his contributions to statistical quality control.
Data concerning Bedwell Enterprises Corporation's single product appear below:
Selling price per unit $ 240.00
Variable expenses per unit $ 99.50
Fixed expense per month $ 454,290
The unit sales to attain the company's monthly target profit of $35,000 is closest to $_____. (Do not round intermediate calculations.)
Answer:
unit sales = $3482.49
Explanation:
given data
Selling price per unit = $240.00
Variable expenses per unit = $99.50
Fixed expense per month = $454,290
monthly target profit = $35,000
solution
we get here contribution margin that is express as
contribution margin = Sales - Variable cost ..................1
put here value
contribution margin = $240 - $99.50
contribution margin = $140.50
so here Target Contribution margin will be
Target Contribution margin = Fixed cost + Target profits ...............2
put here value
Target Contribution margin = $454,290 + $35,000
Target Contribution margin = $489290
so here unit sales will be as
unit sales = [tex]\frac{489290}{140.5}[/tex]
unit sales = $3482.49
Which job title would be given to someone responsible for planning and controlling production in a manufacturing setting?
Answer:
Production manager
Explanation:
Production manager -
It refers to the person , responsible to organise the business , employment problems , finances , and production is the task assigned to a product manager .
The production manager is responsible for the planning the budget , so that finances are taken care of properly .
Hence , from the given information of the question,
The correct answer is production manager .
Answer:
The correct answer is letter "B": Production manager.
Explanation:
Production managers are responsible for conducting business practices to create the highest possible level of efficiency within an organization, in an attempt to increase profit. Managers use their decision-making authority to acquire inputs from resources, and then use them to produce goods and services that meet the needs of customers.
A regression line for predicting the selling prices of homes in Chicago is y^ = 168 + 102x, where x is the square footage of the house. Interpret the residual for a house with 1800 square feet that recently sold for $200,000
Answer:
the house was sold for 16,232 more than the expected based on the regression line
Explanation:
First, we determine know that the regression line for prediction of selling prices of homes in Chicago
y^ = 168 + 102x
No we extract the information required for the question as follows
1) The house has a square feet of 1800
2) The house was recently sold for $200,000
Therefore, based on the information and the predicting regression line
y^ = 168 + 102x
= y^ = 168 + 102 (1800)
y^ = 168 + $183,600
y^ = 183,768
Since observed value for 1800 square foot is y=$200,000
Residual is = 183,768 - 200,000
=-16,232
the house was sold for 16,232 more than the expected based on the regression line
Final answer:
The residual for the house in question is $16,232, which represents the difference between the actual selling price of $200,000 and the predicted price of $183,768 based on the provided regression equation for square footage.
Explanation:
The regression equation provided is y^ = 168 + 102x, where y^ is the predicted selling price of homes and x is the square footage. To interpret the residual for a specific house, we need to compare the actual selling price with the predicted price from the model. For a house with 1800 square feet that sold for $200,000, we first calculate the predicted selling price using the regression equation:
Predicted price: y^ = 168 + 102(1800) = 168 + 183,600 = $183,768
The residual is the actual selling price minus the predicted price. Therefore:
Residual = Actual price - Predicted price = $200,000 - $183,768 = $16,232
This positive residual indicates that the house sold for $16,232 more than the predicted selling price based on its square footage.
On August 31, 2018, the general ledger of The Dean Acting Academy shows a balance for cash of $7,944. Cash receipts yet to be deposited into the checking account total $3,338, and checks written by the academy but not yet processed by the bank total $1,425. The company’s balance of cash does not reflect a bank service fee of $35 and interest earned on the checking account of $46. These amounts are included in the balance of cash of $6,042 reported by the bank as of the end of August. 1. Prepare a bank reconciliation to calculate the correct ending balance of cash on August 31, 2018 2. Record the necessary entry(ies) to adjust the balance for cash.
Explanation:
The Dean Acting Academy
Bank reconciliation statement
August 31, 2018
Particulars Amount Particulars Amount
Bank cash balance $6,042 Company cash balance $7,944
Deposits in transit $3,338 Interest earned $46
Less: Outstanding Less: service fee -$35
Check - $1,425
Bank balance Company balance
After reconciliation $7,955 After reconciliation $7,955
2. The adjusting entries are
Cash A/c Dr $46
To Interest revenue $46
(Being the interest revenue is recorded)
Bank service fee expense A/c Dr $35
To Cash A/c $35
(Being the service fee expense of bank is recorded)
The bank reconciliation starting from the company's book balance to the corrected cash balance involves adding deposits in transit, subtracting outstanding checks and netting out bank-generated fees and credits. The ending balance is $9,868. The necessary entries to adjust the cash balance are a debit to Bank Charges Expense and a credit to Interest Income.
Explanation:The student is attempting to reconcile the Dean Acting Academy's book balance and bank accounting balance as of August 31, 2018. A bank reconciliation helps align the bank’s records with the company's accounting records and it is important when managing an entity's finance. Here are the steps:
Start with the balance according to your records, which is $7,944 Add any deposits in transit (i.e., receipts yet to be deposited into the checking account), which totals $3,338Subtract any outstanding checks (i.e., checks written but not yet processed by the bank), which total to $1,425Subtract any charges by the bank not yet accounted for in your books (bank service fee), which is $35Add any credit by the bank not yet accounted for in your books (interest earned on the checking account), which is $46
After these adjustments, the reconciled cash balance should be $7,944+$3,338-$1,425-$35+$46 = $9,868 which should match with the company's accounting records.
Having done the bank reconciliation, the necessary entries to adjust the balance for cash are: a debit of $35 to Bank Charges Expense (or a similar account), a credit of $46 to Interest Income, and both of these amounts need to be adjusted in the Cash account as well.
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Research on honesty shows that individuals fall into three groups: (1) those who will almost always be honest, (2) those who are situationally honest, and (3) those who will always be dishonest. Which of these groups is (are) the biggest?
Answer:
The answer is 2) those who are situationally honest.
Explanation:
Research on honesty shows that individuals fall into three groups: (1) those who will almost always be honest, are approximately 30% of the population. (2) those who are situationally honest, are approximately 40% of the population and (3) those who will always be dishonest, are approximately 30% of the population.
Jupiter Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2017. The goods have a sales price of $610,000 (cost of $500,000). The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,000. Past history indicates that the cash discount will be taken. On January 28, 2017, Danone makes payment to Jupiter for the full sales price.
Instructions:
(a) Prepare the journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2017, and the payment on January 28, 2017. Assume that Jupiter Company records the January 2, 2017, transaction using the net method.
(b) Prepare the journal entry(ies) to record the sale and related cost of goods sold for Jupiter Company on January 2, 2017, and the payment on January 28, 2017. Assume that Jupiter Company records the January 2, 2017, transaction using the gross method.
Final answer:
Journal entries for the sale and receipt of payment by Jupiter Company would differ based on whether the net method or the gross method is used. Under the net method, sales are recorded net of the discount, and payments are recorded accordingly. Under the gross method, full sales are initially recorded with discounts applied upon payment.
Explanation:
The student has asked for the journal entries related to the sale of goods by Jupiter Company to Danone Inc., specifically under different accounting methods: the net method and the gross method.
Net Method For the sales transaction on January 2, 2017, Jupiter Company would record the sale with the anticipated cash discount under the net method as follows:
Credit Notes Receivable for $610,000
These entries reflect the recognition of sales revenue and cost of goods sold on the sale date, and the recognition of the cash receipt on the payment date, under each respective method.
The Jackson State Bank is worried because many of the loans it has made are home mortgages which can be paid off early by the homeowner. What type of risk would this be an example of?a. Default risk b. Inflation risk c. Liquidity risk d. Call risk e. Basis risk
Answer:
The correct answer is letter "D": Call risk.
Explanation:
The term call risk is usually related to bonds. It refers to the option bonds have to be redeemed before maturity. Bond issuers take advantage of call risks when interest rates drop in the market to redeem the bonds already issued to issue new bonds at a lower rate.
A bank estimates that its profit next year is normally distributed with a mean of 0.8% of assets and the standard deviation of 2% of assets. How much equity (as a percentage of assets) does the company need to be (a) 99% sure that it will have a positive equity at the end of the year and (b) 99.9% sure that it will have positive equity at the end of the year
Answer:
a) 5.45%
b) 6.98%
Explanation:
We are given the following information in the question:
Mean, μ = 0.8%
Standard Deviation, σ = 2%
We are given that the distribution of profit is a bell shaped distribution that is a normal distribution.
Formula:
[tex]z_{score} = \displaystyle\frac{x-\mu}{\sigma}[/tex]
a) We have to find the value of x such that the probability is 0.99
P(X < x)
[tex]P( X < x) = P( z < \displaystyle\frac{x - 0.8}{2})=0.99[/tex]
Calculation the value from standard normal z table, we have,
[tex]P(z < 2.326) = 0.99[/tex]
[tex]\displaystyle\frac{x - 0.8}{2} = 2.326\\\\x = 5.452 \approx 5.45[/tex]
Thus, 5.45% of assets does the company need to be 99% sure that it will have a positive equity at the end of the year.
b) We have to find the value of x such that the probability is 0.999
P(X < x)
[tex]P( X < x) = P( z < \displaystyle\frac{x - 0.8}{2})=0.999[/tex]
Calculation the value from standard normal z table, we have,
[tex]P(z < 3.090) = 0.999[/tex]
[tex]\displaystyle\frac{x - 0.8}{2} = 3.090\\\\x = 6.98[/tex]
Thus, 6.98% of assets does the company need to be 99% sure that it will have a positive equity at the end of the year.
To be liable on a negotiable instrument, a person must:
a. sign the instrument.
b. have a relative who is not an agent sign the instrument.
c. draft an arbitration clause for the instrument.
Answer:
The correct answer is letter "A": sign the instrument.
Explanation:
When talking about negotiable instruments, there are two types of liabilities: Signature Liability and Warranty Liability. Signature Liability refers to those documents where who signs is potentially liable for the responsibilities of the document stated. Warranty Liability is where the liability relies on the person to whom the document was transferred in good faith.
In both cases, the initial holder of the document must sing the instrument so it will be clear to whom belongs the liability.
"The correct option is a. sign the instrument.
To be liable on a negotiable instrument, a person must sign the instrument. This is a fundamental principle of negotiable instruments law, which is codified in various legal frameworks such as the Uniform Commercial Code (UCC) in the United States. The signature on a negotiable instrument indicates that the person has agreed to be bound by the terms of the instrument and is primarily liable for payment.
a. sign the instrument: This is correct. By signing the instrument, a person indicates their agreement to the terms and their liability on the instrument.
b. have a relative who is not an agent sign the instrument: This is incorrect. The liability does not extend to relatives unless they have signed the instrument in a capacity that makes them a party to it, such as a co-maker or endorser.
c. draft an arbitration clause for the instrument: This is incorrect. While an arbitration clause may dictate how disputes are resolved, it does not make a person liable on a negotiable instrument. Liability is established by the signature on the instrument, not by the presence of an arbitration clause.
Therefore, the requirement for liability on a negotiable instrument is the signature of the person on the instrument, making option a the correct answer."
Suppose a new process was developed that could be used to make oil out of seawater. The equipment required is quite expensive, but it would in time lead to low prices for gasoline, electricity, and other types of energy. What effect would this have on interest rates? Why?
Answer:
Interest rates will rise
Explanation:
The reason is that the new process will lead to an appreciable rise in productivity in the energy sector. This rise in productivity positively affect the the rate of return on the investments of producers which indicates an increase in income. As people have more money to spend due to increase in income, demand will therefore rise. Increase in income would make the amount of savings and investment rise in the economy. The rise in investment will eventually lead to a rise all interest rates.
I wish you the best.
On December 31, 2016, Avery Corporation paid $18,000 for next year's insurance policy.
This transaction should be recorded as follows by Avery:
A. Insurance expense 18,000 Insurance payable 18,000
B. Prepaid insurance 18,000 Insurance payable 18,000
C. Prepaid insurance 18,000 Cash 18,000
D. Insurance expense 18,000 Cash 18,000
Answer:
C. Prepaid insurance 18,000 debit
Cash 18,000 credit
Explanation:
The company will do a mistake if it reocrd this as a mistake as it will be posting an expense for an evnt that take place during the next accounting cycle (2017) As the insurance will be outstanding during that period not the one ending.
Also it is not an expense as the insurance company now has the obligation to perform if something happens So we have an asset right now, through time and as long as the insurance is not executed we will declare the expenses.
But for now, it is an asset.
Moore General Store purchased office supplies on account during the month of February for $4,500. Payment for the supplies will be made in March. On February 1, the balance in the supplies account was $200. On February 28, supplies on hand amounted to $180. What was the amount of supplies USED during February?
Select one:
a. $ 4880
b. $ 4520
c. $ 4320
d. $ 180
Answer:
The correct answer is option (B).
Explanation:
According to the scenario, the given data are as follows:
Purchased office supplies = $4,500
Supplies on balance account (in beginning) = $200
Supplies remaining (in end of month) = $180
So, To calculate supplies used in February we use following method:
Supplies Used = Supplies in Beginning + Purchased office supplies - Supplies in Ending
= $200 + $4,500 - $180
Supplies Used = $4,520
Hence, the amount of supplies USED during February was $4,520.
a. How does inflation distort ratio analysis comparisons for one company over time (trend analysis) and for different companies that are being compared?
b. Are only balance sheet items or both balance sheet and income statement items affected?
Answer (a):
The inflation distorts the ratio as their are number of things that inflate their prices differently. The prices of the rice is increasing by 1%, wheat prices are growing by 2% and salaries expenses are increasing by 5%. This means there is no consistant increase in all the commodity prices. And this issue becomes very prominent after 3 years. Trend analysis becomes meaningless when we make technological advancements which gives us edge to control the costs of the operations and inflation does the same thing but in opposite direction. It increases the cost of different operations with different percentages.
Answer (b):
Both balance sheet and income statement items would be affected because these are monetary values that would be inflated over time which will blurr the image of the entity.
A free enterprise system refers to: a. Economic assets that are privately owned and exchanged in an open market. b. Property ownership by a centralized government. c. A mix of privately owned and government controlled economic assets. d. An index of economic freedom.
Answer:
a. Economic assets that are privately owned and exchanged in an open market.
Explanation:
A free enterprise is an economy where where economic factors like price, product, and services are determined by market forces and not by the government.
It is also called capitalism, economic assets are privately owned and competition is the yardstick for market success.
The opposite of this is communism where economic factors are controlled by the government.