Some of the generally accepted accounting principles (GAAP) include revenue recognition, the matching principle which requires the matching of revenues and expenses is known as the Conservatism principle. Thus, option c) is correct.
The conservatism principle is one of the generally accepted accounting principles (GAAP) that guides the financial reporting process. It suggests that when faced with uncertainty, accountants should exercise caution and choose the option that is least likely to overstate assets or income.
Under the conservatism principle, accountants should be conservative in their assessments of assets, liabilities, and revenues. This means that they should err on the side of caution and choose values that are more conservative or prudent, even if it means understating assets or income.
The principle recognizes that uncertainties and risks are inherent in business transactions, and it aims to ensure that financial statements provide a realistic and reliable representation of a company's financial position and performance.
By applying the conservatism principle, financial statements are more likely to reflect a conservative estimate of a company's financial health. This can provide a more accurate representation to stakeholders, including investors, lenders, and other interested parties. Additionally, it helps to reduce the potential for misleading financial information or inflated valuations.
In conclusion, the conservatism principle is an important part of GAAP as it promotes prudence and caution in financial reporting. By choosing more conservative estimates, it helps to ensure that financial statements present a reliable and realistic picture of a company's financial condition and performance. Thus, option c) is correct.
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Complete Question:
Some of the generally accepted accounting principles include revenue recognition, the matching principle which requires matching of revenues and expenses is known as ____.
a) Revenue recognition
b) Matching principle
c) Conservatism principle
d) Full disclosure principle
three years ago american insulation corporation issued 10%, $870,000, 10-year bonds for $805,000. american insulation exercised its call privilege and retired the bonds for $860,000. the corporation uses the straight-line method to determine interest.
The gain on retirement of bonds is $30,000.
three years ago american insulation corporation issued 10%, $870,000, 10-year bonds for $805,000
In this scenario, American Insulation Corporation issued bonds with a face value of $870,000 and a coupon rate of 10%. However, the bonds were sold for a discounted price of $805,000, which means investors purchased them at a lower price than their face value. Three years later, the corporation decided to exercise its call privilege and retire the bonds by paying off the bondholders. The retirement price was $860,000, which is higher than the discounted price but lower than the face value.
To calculate the gain on retirement of bonds, we need to compare the retirement price ($860,000) with the carrying amount of the bonds on the company's books. The carrying amount is determined using the straight-line method, which evenly allocates the discount or premium over the life of the bonds. Since the bonds were initially issued at a discount, the carrying amount would be lower than the face value.
In this case, the gain on retirement is calculated as the difference between the retirement price ($860,000) and the carrying amount of the bonds. The gain is $30,000 ($860,000 - carrying amount). This gain represents the amount by which the corporation benefited from retiring the bonds at a price lower than their carrying value.
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Hi-Volt Electronics had multiple carrier fire insurance coverage in the amount of $500,000, as follows: Aetna: State Farm: Liberty Mutual: $300,000 policy $125,000 policy $75,000 policy $500,000 total coverage Assuming that all coinsurance clause stipulations have been met, how much would each carrier be responsible for in the event of a $95,000 fire? Level 2 Chapter 19 - Section II - Exercise 24 Hi-Volt Electronics had multiple carrier fire insurance coverage in the amount of $500,000, as follows: Aetna = State Farm = $300,000.00 policy $125,000.00 policy $75,000.00 policy Total coverage Liberty Mutual = Assuming that all coinsurance clause stipulations have been met, how much would each carrier be responsible for in the event of a $95,000 fire? Amount of loss = Carrier's percent of total coverage Aetna = State Farm = Liberty Mutual = Carrier's share of loss Aetna = State Farm = Liberty Mutual =
In the event of a $95,000 fire, Aetna would be responsible for $57,000, State Farm for $23,750, and Liberty Mutual for $14,250.
The total coverage provided by the insurance policies is $500,000. To determine each carrier's share of the loss, we calculate their percentage of the total coverage.
Aetna's policy covers $300,000, which is 60% of the total coverage ($300,000 / $500,000). Therefore, Aetna would be responsible for 60% of the $95,000 fire loss, which amounts to $57,000.
State Farm's policy covers $125,000, which is 25% of the total coverage ($125,000 / $500,000). State Farm would be responsible for 25% of the fire loss, which amounts to $23,750.
Liberty Mutual's policy covers $75,000, which is 15% of the total coverage ($75,000 / $500,000). Liberty Mutual would be responsible for 15% of the fire loss, which amounts to $14,250.
Therefore, in the event of a $95,000 fire, Aetna would be responsible for $57,000, State Farm for $23,750, and Liberty Mutual for $14,250.
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Kristen, quit her full-time job with the Telstra one year ago and enrolled full-time in a Bachelor of Biomedical Science. Kristen has a part-time job working eight hours per week at a local Wilston coffee shop
Kristen’s assessable income for the 2021 income year consisted of gross wages totalling $14,160 (this amount includes PAYG withholding tax of $1,452 deducted) and interest income of $34 from her Westpac savings account. Kristen also received a fully franked dividend of $112 from Myer Holdings Ltd during the 2021 income year. The company tax rate in respect of this dividend was 30%. Kristen has no other assessable or exempt income, no reportable fringe benefits, and no reportable employer superannuation contributions. Kristen incurred allowable deductions of $66 in relation to her salary and wage income.
What is her taxable income?
Kristen's taxable income is the amount of income that is subject to tax after allowing for any deductions that are available to reduce the amount of tax payable.
Let's find out her taxable income. Income statement of Kristen for the 2021 income year:
Gross wages = $14,160
PAYG withholding tax deducted = $1,452
Interest income from Westpac savings account = $34
Fully franked dividend from Myer Holdings Ltd = $112
Tax rate for the dividend = 30%
Allowable deductions = $66 Gross Wages Kristen's gross wages for the 2021 income year are $14,160.Pay-As-You-Go (PAYG)Withholding tax deducted = $1,452Therefore, Kristen's gross wages after PAYG withholding tax deductions are: 14,160 - 1,452 = $12,708.Interest income Kristen's interest income from her Westpac savings account is $34.Fully franked dividend Kristen received a fully franked dividend of $112 from Myer Holdings Ltd, and the company tax rate for the dividend is 30%.
Therefore, Kristen's gross dividend before company tax is: 112/ (1-0.30) = $160 Kristen's taxable income is: Taxable income = (Gross wages - Allowable deductions) + (Gross dividend before tax x Company tax rate)Taxable income = ($12,708 - $66) + ($160 x 0.30)Taxable income = $12,642 + $48Taxable income = $12,690
Therefore, Kristen's taxable income for the 2021 income year is $12,690.
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A toll bridge across Mississippi River is being considered as a replacement for the current I-40 bridge linking Tennessee to Arkansas. Because this bridge, if approved, will become a part of the U.S. Interstate Highway system, the B-C ratio method must be applied in the evaluation. Investment cost of the structure are estimated to be $17,000,000 and $325,000 per year in operating and maintenance costs are anticipated. In addition, the bridge must be resurfaced every fifth year of its 30-year projected lie at a cost of $1,250,00per occurrence (no resurfacing cost in year 30). Revenues generated from the roll are anticipated to be $2,500,000 in its first year of operation, with a projected annual rate of increase of 2.25% per year due to the anticipated annual increase in traffic across the bridge. Assuming zero market (salvage) value for the bridge at the end of 30 years and MARR 10% per year, should the toll bridge be constructed?
Yes, the toll bridge should be constructed because the Benefit-Cost Ratio (B-C ratio) is 13.41, which is greater than 1. This indicates that the present value of benefits outweighs the present value of costs, making it a financially viable project.
To determine whether the toll bridge should be constructed, we need to calculate the Benefit-Cost Ratio (B-C ratio) and compare it to the threshold value. The B-C ratio is calculated by dividing the present value of benefits by the present value of costs.
First, let's calculate the present value of benefits. We will consider the revenues generated from tolls and the savings from resurfacing costs. The anticipated annual increase in toll revenue due to increased traffic will be considered using a geometric gradient series.
PV of Toll Revenues:
PV_revenues = [R * (1 - (1 + g)^(-n))] / (r - g)
where R = Initial revenue, g = growth rate, n = number of years, r = discount rate
PV_revenues = [2,500,000 * (1 - (1 + 0.0225)^(-30))] / (0.10 - 0.0225)
PV_revenues ≈ 52,551,529.94
PV of Resurfacing Costs:
PV_resurfacing = C * (1 - (1 + r)^(-n)) / (r * (1 + r)^(-n))
where C = Resurfacing cost, r = discount rate, n = number of years
PV_resurfacing = 1,250,000 * (1 - (1 + 0.10)^(-30)) / (0.10 * (1 + 0.10)^(-30))
PV_resurfacing ≈ 10,594,041.35
Next, let's calculate the present value of costs, which includes the initial investment cost and the annual operating and maintenance costs.
PV of Investment Cost:
PV_investment = C / (1 + r)^n
where C = Investment cost, r = discount rate, n = number of years
PV_investment = 17,000,000 / (1 + 0.10)^30
PV_investment ≈ 2,150,897.84
PV of Operating and Maintenance Costs:
PV_operating = [C * (1 - (1 + r)^(-n))] / r
where C = Operating cost, r = discount rate, n = number of years
PV_operating = 325,000 * (1 - (1 + 0.10)^(-30)) / 0.10
PV_operating ≈ 2,239,162.42
Now, we can calculate the B-C ratio:
B-C ratio = (PV_revenues + PV_resurfacing) / (PV_investment + PV_operating)
B-C ratio = (52,551,529.94 + 10,594,041.35) / (2,150,897.84 + 2,239,162.42)
B-C ratio ≈ 13.41
Since the B-C ratio is greater than 1, the toll bridge project should be constructed.
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20) Identify the following accounts as temporary or permanent. (16 marks) Temporary Permanent Cash Utilities expense Unearned service revenue Prepaid insurance Accounts receivable Interest expense Accumulated amort.-equip. Amortization expense-equip. Leonard Lucas, Withdrawals Leonard Lucas, Capital Salary payable Accounts payable Interest revenue Mortgage payable Prepaid rent Rent expense Equipment
The accounts that indicate an asset, liability, or equity that is expected to last less than one year from the reporting date are temporary accounts.
Accounts that track transactions that are expected to last more than one year from the reporting date are known as permanent accounts.
So, let's have a look at the accounts given below:Temporary Accounts:Utilities expenseInterest expenseAmortization expense-equip.Rent expenseSalary payableUnearned service revenuePermanent Accounts:CashAccounts receivablePrepaid insuranceAccumulated amort.-equip.Leonard Lucas, CapitalAccounts payableInterest revenueMortgage payablePrepaid rentEquipment.
In conclusion, temporary accounts are those that report balance sheets and income statements, while permanent accounts report balance sheets.
The ending balance in a temporary account will carry over to the retained earnings account at the end of an accounting period and will reset to zero for the start of the next accounting period.
The ending balance in a permanent account carries over from one accounting period to the next.
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If Pinnacle Finance Bank receives a new cash deposit of $150,000, and it has a required reserve ratio of 12 percent, how much total money could
potentially be created from that deposit?
With a new cash deposit of $150,000 and a required reserve ratio of 12 percent, Pinnacle Finance Bank could potentially create a total money supply of $1,249,500.
The total money that can be created from a deposit is determined by the concept of the money multiplier, which represents the ratio of the total money supply to the initial deposit. The money multiplier is calculated as the reciprocal of the reserve ratio. In this case, the required reserve ratio is 12 percent or 0.12.
To calculate the potential money creation, we use the formula:
Potential Money Creation = (1 / Reserve Ratio) * Initial Deposit
Substituting the given values:
Potential Money Creation = (1 / 0.12) * $150,000
Potential Money Creation = 8.33 * $150,000
Potential Money Creation = $1,249,500
Therefore, with a new cash deposit of $150,000 and a required reserve ratio of 12 percent, Pinnacle Finance Bank could potentially create a total money supply of $1,249,500. This means that the bank can lend out a portion of the deposit while maintaining the required reserves, thereby increasing the money supply in the economy.
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Rodriguez Corporation issues 12,000 shares of its common stock for $237,300 cash on February 20. Prepare journal entries to record this event under each of the following separate situations.The stock has a $18 par value.The stock has neither par nor stated value.The stock has a $9 stated value.
Journal entries are personal written reflections or accounts of one's experiences, thoughts, and emotions. They are often used as a tool for self-reflection, self-expression, and personal growth. Journaling can be done in various formats, such as handwritten entries in a physical notebook, digital journals, or even online blogs.
Let's prepare the journal entries for each situation:
The stock has a $18 par value:Date: February 20Cash - $237,300Common Stock-$216,000 Additional Paid-in Capital in Excess of Par - Common Stock $21,300In this case, the common stock is issued at the par value of $18 per share. The total par value of 12,000 shares is calculated as
$18 x 12,000 = $216,000 The remaining cash received of
$21,300 ($237,300 - $216,000) is recorded as Additional Paid-in Capital in Excess of Par - Common Stock.
2. The stock has neither par nor stated value:
Date: February 20Cash $237,300 Common StockWhen the stock has neither par nor stated value, the full amount received from issuing the shares is recorded in the Common Stock account.
3. The stock has a $9 stated value:
Date: February 20
Cash-$237,300 Common Stock-$108,000 Additional Paid-in Capital in Excess of Stated Value - Common Stock $129,300In this case, the common stock is issued with a stated value of $9 per share. The total stated value of 12,000 shares is calculated as
$9 x 12,000 = $108,000. The remaining cash received of
$129,300 ($237,300 - $108,000) is recorded as Additional Paid-in Capital in Excess of Stated Value - Common Stock.
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You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. The profit-maximizing output for your firm is:
The profit-maximizing output for the firm can be determined by finding the quantity that maximizes the difference between total revenue and total cost.
In this case, the firm's cost function is given as C = 60 + 4Q^2, where Q represents the quantity produced. To calculate the profit-maximizing output, we need to find the quantity that maximizes the difference between the revenue function and the cost function.
To determine the revenue function, we need to know the demand function or the relationship between the quantity sold and the price. However, in this case, the demand function is not provided. Without the demand function, we cannot calculate the revenue function or find the profit-maximizing output.
Therefore, without information about the demand function or the relationship between quantity and price, it is not possible to determine the specific profit-maximizing output for the firm.
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T/F : Average total cost equals average fixed costs plus average variable costs.
False. Average total cost (ATC) does not equal average fixed costs (AFC) plus average variable costs (AVC). Instead, average total cost is the sum of average fixed costs and average variable costs.
Average fixed costs represent the fixed costs per unit of output, while average variable costs represent the variable costs per unit of output. Fixed costs are expenses that do not vary with the level of production, such as rent, insurance, and salaries, while variable costs change with the level of output, such as raw materials and labor.
Average total cost, on the other hand, represents the total costs per unit of output, including both fixed and variable costs. It is calculated by dividing the total cost by the quantity of output. Mathematically, ATC equals AFC plus AVC, as the fixed costs and variable costs are combined to determine the overall cost per unit of output. Therefore, the statement that average total cost equals average fixed costs plus average variable costs is false.
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the company has following results. 5049 hours actually worked and paid costing $4375. if the rate variance is $353, the efficiency variance $128 favorable, and 2500 units were produced. what is the standard production time per period?
Based on the given information, the company worked a total of 5049 hours and incurred a cost of $4375. The rate variance is $353, and the efficiency variance is $128 favorable. Additionally, the company produced 2500 units. We need to determine the standard production time per period.
To find the standard production time per period, we can use the formula:
Standard Production Time = Actual Hours Worked / (Efficiency Variance / Standard Units Produced)
From the given information, we know that the actual hours worked are 5049, the efficiency variance is $128 favorable, and the standard units produced are 2500.
Substituting these values into the formula:
Standard Production Time = 5049 / (128 / 2500)
Simplifying the expression:
Standard Production Time = 5049 / (128 / 2500) = 5049 / (0.0512)
Calculating the value:
Standard Production Time = 98539.84375
Therefore, the standard production time per period is approximately 98539.84375 units.
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the term __________refers to the percentage share of a firm's total sales in the market.
The term "market share" refers to the percentage share of a firm's total sales in the market.
Market share is a measure that indicates the portion or percentage of total sales a company or brand has in a specific market. It represents the company's relative position compared to its competitors in terms of sales volume or revenue. Market share is typically calculated by dividing the company's sales or revenue by the total market sales or revenue and multiplying the result by 100 to express it as a percentage.
Market share is an important metric for businesses as it provides insights into their competitiveness and market position. It helps companies understand their relative strength in the market and their performance compared to competitors. Monitoring and increasing market share can be a strategic objective for companies aiming to expand their customer base, gain a larger market presence, and potentially achieve higher profitability.
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A supermarket building was purchased for $567,000. The down payment was 12%. The balance was financed at 7.97% for 25 years. Find the montly payment is
The monthly payment for the supermarket building is approximately $3,667.63. To find the monthly payment for a supermarket building, the following formula: Monthly payment = P[r(1+r)^n/((1+r)^n)-1)]
we will need to make use of the following formula: Monthly payment = P[r(1+r)^n/((1+r)^n)-1)]
where P = the principal,
r = the interest rate per month, and
n = the total number of months.
We will calculate the values of P, r, and n using the information provided in the problem statement:
Down payment = 12% of $567,000 = 0.12 × $567,000 = $68,040
Principal = $567,000 − $68,040 = $498,960
Interest rate per year = 7.97%
Number of years = 25Number of months = 25 × 12 = 300To convert the interest rate per year to the interest rate per month, we will divide by 12:
Interest rate per month = 7.97% ÷ 12 = 0.6642% Plugging in these values into the formula, we get:
Monthly payment = $498,960[0.006642(1+0.006642)^300/((1+0.006642)^300−1)]
Monthly payment = $3,667.63.
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Which of the following should be included in the capital budgeting process? Check all that apply. a. Estimating sunk costs and adding them to the valuation. b. Computing the present value of the expected cash flows. c. Computing depreciation using different methods to include in the analysis. d. Comparing the present value of the cash flows with the initial investment, or cost, required to acquire the asset.
The following options should be included in the capital budgeting process: b) Computing the present value of the expected cash flows and
d. Comparing the present value of the cash flows with the initial investment, or cost, required to acquire the asset.
Capital budgeting is the process of evaluating and selecting long-term investment projects that will create value for a business over time. The process includes several steps, and the goal is to identify and analyze potential investment opportunities and choose those that will generate the highest return on investment.
The options given in the question are as follows:
a. Estimating sunk costs and adding them to the valuation.
b. Computing the present value of the expected cash flows.
c. Computing depreciation using different methods to include in the analysis.
d. Comparing the present value of the cash flows with the initial investment, or cost, required to acquire the asset.
Option a, estimating sunk costs, is not relevant to the capital budgeting process because sunk costs are costs that have already been incurred and cannot be recovered. They are not relevant to future investment decisions.
Option c, computing depreciation using different methods, is also not directly relevant to the capital budgeting process. Depreciation is a non-cash expense that reduces taxable income, but it does not affect cash flows directly.
Option b, computing the present value of the expected cash flows, is an essential step in the capital budgeting process. The present value of expected cash flows is calculated to evaluate the profitability of a potential investment opportunity.
Option d, comparing the present value of the cash flows with the initial investment or cost, is also an essential step in the capital budgeting process. This comparison is necessary to determine whether the potential investment opportunity is profitable and generates a positive net present value.
In conclusion, the capital budgeting process should involve computing the present value of expected cash flows and comparing the present value of cash flows with the initial investment or cost.
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Apple assembles smart phones in China and distribute them worldwide. This is an example of: Group of answer choices
a. A loosely coordinated global supply network
b. Tightly coordinated global supply network
c. Centralized global supply network configuration
d. Dispersed global supply network configuration
e. None of the other items in this set are correct
The correct option is c. Centralized global supply network configuration.
What is a supply network?
Suppliers, parts, processes, and modes of transportation must be selected from a range of options that vary in cost, lead time, and other characteristics at each level of the supply chain.Plan, source, produce, deliver, and return are the five main operations that make up this model's top level. These activities are also referred to as supply chain management components.Distribution, operations, buying, and integration make up the four main parts of supply chain management.Since one depends on the other to provide a smooth path from design to completion as efficiently as possible, supply chain configuration is an effective technique to deal with product differentiation and customization within a supply chain network.Learn more about the supply chain network here:
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rachel's recordings reported net income of $290,000. beginning balances in accounts receivable and accounts payable were $16,000 and $21,000 respectively. ending balances in these accounts were $8,500 and $29,000, respectively. assuming that all relevant information has been presented, rachel's net cash flows from operating activities would be:
Cash flows refer to the movement of money into and out of a business or individual's finances over a specific period. It tracks the inflows and outflows of cash from various activities, providing insights into the sources and uses of cash. Rachel's net cash flows from operating activities would be $274,500.
Rachel's net cash flows from operating activities can be calculated using the indirect method by adjusting the net income for changes in accounts receivable and accounts payable.
Net Cash Flows from Operating Activities = Net Income + Decrease in Accounts Receivable - Increase in Accounts Payable
Net Income = $290,000
Change in Accounts Receivable = Ending Balance - Beginning Balance = $8,500 - $16,000 = -$7,500 (decrease)
Change in Accounts Payable = Ending Balance - Beginning Balance = $29,000 - $21,000 = $8,000 (increase)
Substituting the values into the formula:
Net Cash Flows from Operating Activities =
$290,000 + (-$7,500) - $8,000 = $290,000 - $7,500 - $8,000 = $274,500
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U.S. military aid granted to foreign countries is entered in the: a. Merchandise trade account b. Current account c. Official settlements account d. Capital account
The correct answer is c. Official settlements account. What is the official settlements account ?The official settlements account records the transactions that a country makes with other countries. The balance of payments account includes the official settlements account as one of its components.In the case of the US, military aid granted to foreign countries is recorded in the official settlements account.
The capital account records transactions involving financial assets and liabilities, such as investments in foreign countries, foreign direct investment, and loans. Finally, the merchandise trade account records the value of merchandise (goods) exported and imported by a country.
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O'Reilly and CB Solutions. Heather O'Reilly, the treasurer of CB Solutions, believes interest rates are going to rise, so she wants to swap her future floating-rate interest payments for fixed rates. Presently, she is paying LIBOR +2.00% per annum on $5,200,000 of debt for the next two years, with payments due semiannually LIBOR is currently 3.99% per annum. Heather has just made an interest payment today, so the next payment is due six months from now Heather finds that she can swap her current floating-rate payments for fixed payments of 7.009% per annum. (CB Solutions' weighted average cost of capital is 12%, which Heather calculates to be 6% per 6-month period, compounded semiannually). a. IF LIBOR rises at the rate of 50 basis points per 6-month period, starting tomorrow, how much does Heather save or cost her company by making this swup? b. If LIBOR falls at the rate of 25 basis points per 6-month period, starting tomorrow, how much does Heather save or cost her company by making this wap? a. If LIBOR rises at the rate of 50 basis points per 6-month period, starting tomorrow, how much does Heather save or cost her company by making this swap? The swap V for the first six-month period is $. (Select from the drop-down menu and round to the nearest dollar)
Heather O'Reilly swaps her floating-rate interest payments for fixed rates to hedge against rising interest rates. If LIBOR rises by 50 basis points per 6-month period, starting tomorrow, the swap will save her company approximately $46,086.
By swapping her floating-rate payments of LIBOR +2.00% for fixed payments of 7.009% per annum, Heather aims to protect her company from rising interest rates. If LIBOR increases by 50 basis points per 6-month period, the effective interest rate for her current debt will rise to 6.49% (LIBOR +2.00% +0.50%). Comparing this to the fixed rate of 7.009%, the swap saves her company the difference between the two rates.
To calculate the savings, we need to determine the interest payments for both scenarios. With the current floating rate, the semiannual interest payment is $260,000 (5,200,000 * (3.99% / 2)). Under the fixed rate, the semiannual payment is $175,409 (5,200,000 * (7.009% / 2)). The difference between the two payments is approximately $84,591.
However, since the swap occurs six months from now, we need to discount the future cash flows to their present value. Using the weighted average cost of capital (6% per 6-month period, compounded semiannually), the present value of the savings is approximately $46,086.
Therefore, if LIBOR rises by 50 basis points per 6-month period, making the swap saves Heather's company around $46,086.
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Multiple Choice O $16.000 $39,000 $7,000 $48,000 Multiple Choice O $16.000 $39,000 $7,000 $48,000 The cash budget for the first three quarters of the HICASH-691 company is given below (000 omitted). The company requires a minimum cash balance of $5,000 to start each quarter. If necessary, the company will borrow money from its bank to maintain this balance. The company will pay no interest in Quarters 1, 2, and 3. It will repay as much of Its borrowings as possible as soon as it has more than $5,000 in cash in a given quarter. Suppose the company starts the first quarter with no bank debt. How much total bank debt does the company expect to have at the end of the third quarter? Cash Budget Quarter (000 omitted) 1 2 3 Cash balance, beginning $7 ? Add collections from customers 88 129 Total cash available ? ? Less disbursements: Purchase of Inventory 56 65 Selling and administrative expenses 40 45 Equipment purchases 10 Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Total financing Cash balance, ending 8 2 ? ? 2 2 ? ? 88 ? 65 49 11 2 2 ?
HICASH-691 company expects to have a total bank debt of $39,000 at the end of the third quarter.
In the cash budget, the cash balance at the beginning of the first quarter is $7,000. The company expects to add collections from customers of $88,000 in the first quarter. The total cash available for the first quarter is the sum of the beginning cash balance and collections from customers, which is $7,000 + $88,000 = $95,000.
The company then deducts various disbursements, such as the purchase of inventory, selling and administrative expenses, and equipment purchases, resulting in a total disbursement of $65,000 in the first quarter. The excess (or deficiency) of cash available over disbursements is $95,000 - $65,000 = $30,000. If there is a deficiency, the company will borrow from the bank.
The cash balance at the end of the first quarter is $8,000, and the company expects to have a total bank debt of $2,000. Similarly, for the second and third quarters, the excess (or deficiency) of cash available over disbursements is $16,000 and $7,000, respectively. At the end of the third quarter, the company expects to have a total bank debt of $39,000.
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Q9.How do you use the current ratio to evaluate business performance (10 marks)
The current ratio is calculated by dividing a company's current assets by its current liabilities. It is used to assess a business's short-term liquidity and ability to meet its short-term obligations.
A current ratio above 1 indicates that a company has more current assets than current liabilities, suggesting good liquidity. However, a very high current ratio may imply inefficient use of assets. On the other hand, a current ratio below 1 suggests potential difficulties in meeting short-term obligations. By analyzing the current ratio over time and comparing it to industry averages, investors and analysts can assess a company's financial health and performance in managing its working capital.
The current ratio is a valuable tool for evaluating business performance because it provides insights into a company's liquidity position and its ability to cover short-term obligations. A ratio above 1 generally indicates a favorable liquidity position, as it signifies that a company has sufficient current assets to meet its current liabilities. This suggests that the business can pay off its short-term debts and fund its operations without facing immediate financial strain. However, an excessively high current ratio may indicate that a company is not efficiently utilizing its assets or has excess working capital that could be invested elsewhere.
Conversely, a current ratio below 1 suggests potential liquidity issues and difficulty in meeting short-term obligations. This may raise concerns about a company's ability to manage its working capital effectively and can be a red flag for potential financial distress.
It is important to consider the industry benchmarks and trends when interpreting the current ratio. Comparing a company's current ratio to industry averages can provide a context for evaluating its performance. If a company's current ratio is significantly below industry norms, it may indicate inefficiencies or poor management of working capital.
Overall, the current ratio is a useful tool for assessing a company's liquidity position and short-term financial health. It should be used in conjunction with other financial ratios and indicators to get a comprehensive understanding of a business's performance.
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Company ABC has recorded sales revenue of RM12,775.00 in the previous month for 3,650 units sold. The total costs incurred for the production is RM10617.50 with RM1.95 is the variable cost per unit. Recently, Company ABC received a special order from their customer with a one-time order for 1,500 units at a discount of 10% from the current price. Please suggest to the Company ABC whether or not they accept this special order by using differential analysis. Sales revenue Variable cost Contribution margin Fixed cost Operating profit Alternative presentation differential analysis Differential Sales, ...unit at rm.... Less: Differential Costs,...unit at rm Differential operating Profit Status Quo Alternative Difference
Differential analysis is a managerial accounting technique used to evaluate the financial impact of a decision by comparing the costs and benefits between alternative courses of action. It focuses on analyzing the differences, or differentials, in costs, revenues, and profits associated with different options
Based on the differential analysis, Company ABC should accept the special order. The differential sales revenue for the special order would amount to RM17,297.50, considering the discounted price per unit. The differential costs for producing the additional 1,500 units would be RM2,925.00, taking into account the difference in variable cost per unit. Consequently, the differential operating profit resulting from the special order would be RM4,755.00, which is calculated by subtracting the differential costs from the differential sales revenue. By accepting the special order, Company ABC would generate an additional profit of RM4,755.00 compared to the status quo. Therefore, it is recommended that they accept the special order.
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Locus of control, task ability, and need for achievement are part of which element in path-goal theory?
Multiple Choice
employee characteristics
environmental factors
leader behaviors
leadership effectiveness
Path-goal theory suggests that leaders can improve the effectiveness of their subordinates by altering the path to the rewards.
The three key variables of this theory are Locus of control, task ability, and need for achievement. These are part of the follower's characteristics element in path-goal theory. The locus of control is the extent to which people believe that they can control their own behavior and environment.
People with an internal locus of control believe that they have control over the events that affect their lives, whereas those with an external locus of control believe that outside forces are responsible for their fate. Task ability refers to a person's level of competence and skill at a particular task, while the need for achievement is the desire to succeed in challenging situations.Path-goal theory also identifies four styles of leadership that are used to guide and direct subordinates toward the path to rewards. These leadership styles include directive leadership, supportive leadership, participative leadership, and achievement-oriented leadership. The effectiveness of these leadership styles is dependent on the follower's characteristics, such as locus of control, task ability, and need for achievement.
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1.Choose any company national ya multinational
2. Company background
3. Mission
4. Vision
5. Goals and Objectives
6. KPI's ( Quantifier)
7. PI's
Company Background: Nike, Inc. is a multinational corporation that is headquartered in Beaverton, Oregon. It is best known for producing and marketing athletic shoes, apparel, and accessories. Nike is a significant player in the global sportswear industry and is one of the world's most recognizable brands.
Phil Knight and Bill Bowerman founded Nike in 1964 as Blue Ribbon Sports. Nike's primary goal was to supply high-quality running shoes to athletes. By the end of the decade, the company had shifted its focus to designing and marketing athletic shoes, as well as introducing new product lines such as tennis and basketball shoes. Nike is now the world's largest supplier of athletic shoes and apparel, with a presence in over 190 countries.
Mission: Nike's mission is to bring innovation and inspiration to every athlete in the world.
Vision: Nike's vision is to remain the world's leading athletic brand.
Goals and Objectives: Nike's main goal is to deliver high-quality and innovative products to its customers while remaining true to its commitment to social and environmental responsibility. Its objectives include expanding its product line to meet changing consumer demands, improving its supply chain efficiency, and growing its market share in key global markets.
KPIs (Quantifier): Nike's KPIs are focused on sales growth, profit margins, inventory turnover, and customer satisfaction.
PIs: Nike's PIs are focused on measuring product quality, product innovation, brand recognition, and employee engagement.
In conclusion, Nike is a multinational corporation that is known worldwide for its high-quality athletic shoes, apparel, and accessories. Its mission is to bring innovation and inspiration to every athlete in the world, while its vision is to remain the world's leading athletic brand. Nike's primary goal is to deliver innovative products to its customers while remaining true to its commitment to social and environmental responsibility. The company's objectives include expanding its product line, improving its supply chain efficiency, and growing its market share in key global markets. Nike's KPIs are focused on sales growth, profit margins, inventory turnover, and customer satisfaction, while its PIs are focused on measuring product quality, product innovation, brand recognition, and employee engagement. Overall, Nike has established itself as one of the most recognizable and respected brands in the world.
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Which category of statement of cash flows shows cash inflows and outflows that are related to long-term investments in the company's infrastructure? Select one: O a. Cash flow from selling activities O b. Cash flow from financing activities O c. Cash flow from investing activities d. Cash flow from operating activities
The category of the statement of cash flows that shows cash inflows and outflows related to long-term investments in the company's infrastructure is: c. Cash flow from investing activities.
The cash flow from investing activities section of the statement of cash flows records cash flows related to the acquisition and disposal of long-term assets, including investments in the company's infrastructure. This category includes cash inflows from the sale of long-term assets, such as property, plant, and equipment, as well as cash outflows for the purchase of such assets.
Investments in the company's infrastructure typically involve significant amounts of capital expenditure and are considered long-term investments that impact the company's operating capabilities. Therefore, the cash flows associated with these investments are reported under the cash flow from investing activities section.
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Del Gato Clinic deposits all cash receipts on the day when they are received and it makes all cash payments by check At the close of business on June 30, its Cash account shows a $13,385 debit balance. Del Gato Clinic's June 30 bank statement shows $13,022 on deposit in the bank.
a. Outstanding checks as of June 30 total $2,542
b. The June 30 bank statement lists a $35 bank service charge.
c. Check No. 919, listed with the canceled checks, was correctly drawn for $389 in payment of a utility bill on June 15. Del Gato Clinic mistakenly recorded it with a debit to Utility Expense and a credit to Cash in the amount of $398
d. The June 30 cash receipts of $2,879 were placed in the bank's night depository after banking hours and were not recorded on the June 30 bank statement.
Prepare a bank reconciliation for Del Gato Clinic using the above information.
To prepare a bank reconciliation for Del Gato Clinic, we need to analyze the given information and make adjustments to reconcile the Cash account balance with the bank statement balance.
Beginning Cash balance per company records: $13,385 (debit)
Beginning Cash balance per bank statement: $13,022
a. Outstanding checks as of June 30 total $2,542:
These are checks that have been issued by Del Gato Clinic but have not yet cleared the bank.
Adjusted Cash balance per bank records: $13,022 - $2,542 = $10,480
b. The June 30 bank statement lists a $35 bank service charge:
This is a deduction from the bank account for banking fees.
Adjusted Cash balance per bank records: $10,480 - $35 = $10,445
c. Check No. 919 was recorded incorrectly:
The check was written for $389 but recorded as $398. We need to subtract the difference.
Adjusted Cash balance per company records: $13,385 - $9 = $13,376
d. The June 30 cash receipts of $2,879 were not recorded on the bank statement:
These receipts were deposited in the bank's night depository after banking hours and will not be reflected in the bank statement.
Adjusted Cash balance per company records: $13,376 + $2,879 = $16,255
After making the necessary adjustments, the reconciled Cash balance per company records is $16,255, and the reconciled Cash balance per bank records is $10,445. By comparing these balances, we can identify any discrepancies and ensure the accuracy of the company's cash position. The bank reconciliation process helps to reconcile the differences between the company's records and the bank statement, ensuring the accuracy of the Cash account.
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You own 20,000 shares of stock in Short-Term Corp. The company is expected to pay a dividend of $5.1 per share in one year, and a liquidating dividend of $72 per share in two years. The required return on the stock is 12% and there are no taxes.a) What is the current stock price?b) If you prefer equal dividends in both years, how many shares should you buy (enter as a positive number) or sell (enter as a negative number) in one year (just after the dividend payout)?
a) the current stock price is $61.94. b) you should buy 11 shares in one year (just after the dividend payout) to achieve equal dividends.
a) To determine the current stock price, we need to calculate the present value of the expected future dividends.
In one year, Short-Term Corp is expected to pay a dividend of $5.1 per share. The present value of this dividend can be calculated using the formula:
PV = Dividend / (1 + r)^n
Where:
PV = Present value of the dividend
Dividend = Future dividend payment
r = Required return on the stock
n = Number of years
PV1 = $5.1 / (1 + 0.12)^1
= $5.1 / 1.12
= $4.55 (rounded to two decimal places)
In two years, the company is expected to pay a liquidating dividend of $72 per share. Similarly, we calculate the present value of this dividend:
PV2 = $72 / (1 + 0.12)^2
= $72 / 1.2544
= $57.39 (rounded to two decimal places)
The current stock price is the sum of the present values of the expected future dividends:
Current Stock Price = PV1 + PV2
= $4.55 + $57.39
= $61.94
b) If you prefer equal dividends in both years, we need to calculate the annual dividend payment that would result in equal dividends.
Let's denote the annual dividend payment as D. Since we want equal dividends, we can set D as the present value of the two expected dividends:
D = PV1 + PV2
= $4.55 + $57.39
= $61.94
Now, to determine the number of shares you should buy or sell in one year to achieve equal dividends, we need to calculate the difference between the desired dividend amount (D) and the actual dividend expected in one year ($5.1).
Difference = D - Dividend in one year
= $61.94 - $5.1
= $56.84
To achieve equal dividends, you need to buy (if the difference is negative) or sell (if the difference is positive) a number of shares such that the total dividend from those shares equals the difference.
Number of Shares to Buy/Sell = Difference / Dividend in one year
= $56.84 / $5.1
≈ 11.12
Since you cannot buy or sell a fraction of a share, you would need to buy or sell approximately 11 shares to achieve equal dividends.
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a feature common to both stock splits and stock dividends is: multiple choice that there is no effect on total stockholders' equity. a reduction in the invested capital of a corporation. a transfer to earned capital of a corporation. an increase in total liabilities of a corporation.
The feature that is common to both stock splits and stock dividends is that there is no effect on total stockholders' equity. This is the correct answer.
A stock split is a division of an existing share into several smaller shares, with each shareholder receiving additional shares in proportion to the number of shares they previously owned. It aims to make shares more accessible to investors by lowering the market price per share. The company's total market capitalization, the number of shares, and the value of each share all remain the same as a result of a stock split.A stock dividend, on the other hand, is a distribution of additional shares of stock in lieu of cash to current shareholders. A stock dividend is usually announced when a firm has no immediate plans for expansion or investment. As a result, the company's overall value remains unchanged, and stockholders' proportionate interest in the company remains the same. There is no effect on total stockholders' equity when stock splits or stock dividends occur, which is a common feature. Therefore, the correct option is that there is no effect on total stockholders' equity.
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suppose demand is perfectly inelastic, and the supply of the good in question decreases. as a result,
quantity demanded if the demand is perfectly inelastic, and the supply of the good in question decreases, then will remain constant .
Suppose that the demand for a good is perfectly inelastic, which implies that the quantity demanded remains constant despite changes in price levels. If the supply of the good in question decreases due to factors such as natural disasters, then the demand for the good will not change, while the price of the good will rise. This price increase will result in a higher total revenue for producers, but no reduction in the quantity demanded since the demand is perfectly inelastic.
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Title: 9-My paper By: Yanyan Chen 1 of 2 E Projects must have a payback period of less than three years Here are some estimates of the net present value of a project using different interest rates: Discount rates 6% 5% 4% 3% 42 2% 87 pair of interest rates will provide the most accurate estimate if interpolation is used to estimate the project's internal rate 5% and 6% 3% and 4% NPV -180 -110 -30
The pair of interest rates that will provide the most accurate estimate if interpolation is used to estimate the project's internal rate are 3% and 4%.
Interpolation involves estimating values within a range based on known values. In this case, the net present value (NPV) of the project is provided at different interest rates. To estimate the project's internal rate of return (IRR), which is the interest rate at which the NPV is zero, interpolation can be used. By selecting the pair of interest rates closest to zero NPV (in this case, -30), which is between 3% and 4%, the estimate of the project's internal rate can be more accurate.
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FILL THE BLANK. In a recent advertisement broadcast on TV, Tide detergent claimed that its pods have three separate components which work together to provide the maximum stain-cleaning power. This is an example of___
Answer: This is an example of_____
Explanation:
This is an example of item separation or featuring exceptional item includes. The commercial underlines the particular creation of Tide cleanser cases, exhibiting how the three separate parts work in collaboration to convey prevalent stain-cleaning power. Item separation is a promoting system utilized by organizations to recognize their items from rivals and feature extraordinary properties that put them aside on the lookout. By stressing the multi-part plan of their cases, Tide means to situate their item as mechanically progressed and more viable than different cleansers accessible.
5 Critically examine the main lessons for auditors which are provided by decided cases involving alleged negligence standard audio report on a listed company's
The lessons for auditors regarding alleged negligence standard audio report on a listed company's can be critically examined through several decided cases.
Here are five main lessons for auditors provided by such cases:
1. Maintain independence and professional skepticism. The auditors must maintain their independence and professional skepticism. to ensure that they identify and report any material misstatements in the financial statements. Auditors should not be influenced by any management pressure or incentives to issue an unqualified opinion.
2. Perform adequate audit procedures The auditors should perform adequate audit procedures to ensure that they obtain sufficient and appropriate audit evidence to support their opinion on the financial statements. They should plan and perform the audit procedures in such a way that they can identify any fraud, errors or omissions in the financial statements.
3. Consider fraud risk. The auditors should consider the risk of fraud when performing an audit. They should obtain an understanding of the entity and its environment, including its internal controls, to identify and assess the risk of material misstatement due to fraud.
4. Communicate with those charged with governance. The auditors should communicate effectively with those charged with governance to discuss their findings and any issues that arise during the audit. They should also communicate any material weaknesses in the internal control systems of the entity.
5. Maintain professional competence. The auditors should maintain their professional competence by keeping themselves updated with the latest auditing standards and guidelines. They should also be aware of the latest developments in the industry and keep themselves abreast of any changes in the regulatory framework.
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