The basic benefits and purposes of pro forma statements and cash budget are to predict forecast and to manage cash flow. The situation disinflation following a highly inflationary can have positive effect on reduced the cost of goods and services.
For the first question,
Pro forma statements allow companies to anticipate future revenues and expenses, and to make informed decisions about business operations.
A cash budget helps companies to plan for and manage cash inflows and outflows, ensuring that they have enough cash on hand to meet their obligations.
However, there are also pitfalls in the process, including unrealistic assumptions and unforeseen events that can affect financial performance. To avoid these pitfalls, companies should be conservative in their estimates, regularly review and update their assumptions, and have contingency plans in place in case of unexpected events.
For the second question,
Disinflation following a highly inflationary period can have a positive effect on the reported income of a firm because it reduces the cost of goods and services, which can increase profit margins. Disinflation can also be favorable to financial assets because it reduces the risk of inflation eroding the value of investments.
However, there is also a spectre of worry for the firm regarding inflation or disinflation because it can be difficult to predict and manage. Companies need to closely monitor economic conditions and be prepared for changes in inflation or disinflation that could affect their financial performance.
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A business worth $180,000 is expected grow at 12% per year compounded annually for the next 4 years. (a) Find the expected future value. (b) If funds from the sale of the business today would be placed in an account yielding 8% compounded semiannually, what would be the minimum acceptable price for the business at this time?
A business worth $180,000 is expected grow at 12% per year compounded annually for the next 4 years its expected future value of the business is $283,433.60 and the minimum acceptable price for the business at this time is $207,181.36.
(a) To find the expected future value of the business, we can use the formula for compound interest:
FV = PV × (1 + r)^n
Where FV is the future value, PV is the present value, r is the interest rate, and n is the number of compounding periods.
In this case, PV = $180,000, r = 12% = 0.12, and n = 4 years. Plugging these values into the formula, we get:
FV = $180,000 × (1 + 0.12)^4
FV = $180,000 × 1.12^4
FV = $180,000 × 1.57352
FV = $283,433.60
So the expected future value of the business is $283,433.60.
(b) To find the minimum acceptable price for the business today, we need to determine what the future value of the funds from the sale would be if they were placed in an account yielding 8% compounded semiannually.
Using the same formula as before, we have PV = x (the minimum acceptable price), r = 8% = 0.08, and n = 4 years × 2 compounding periods per year = 8 compounding periods. Plugging these values into the formula, we get:
FV = x × (1 + 0.08/2)^8
283,433.60 = x × (1 + 0.04)^8
283,433.60 = x × 1.36824
x = 283,433.60 / 1.36824
x = $207,181.36
So the minimum acceptable price for the business at this time is $207,181.36.
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Q2: Sanad Ltd. issued 100000 shares of BD 100 each at a premium of BD 10 per share, payable as: On application BD. 50 (including BD 10 premium) per share, On allotment BD 40 per share,On call BD. 20 per share.
Requirement:
1. Use the last five numbers of your student ID as the numbers of application received from public. Then, make journal entries by considering that all amounts have been duly received. the number is 11148
The journal entries for Sanad Ltd. issuing 100000 shares of BD 100 each at a premium of BD 10 per share are as follows:
1. On application:
Debit: Bank (11148 x BD 50) = BD 557400
Credit: Share Capital (11148 x BD 40) = BD 445920
Credit: Share Premium (11148 x BD 10) = BD 111480
2. On allotment:
Debit: Bank (11148 x BD 40) = BD 445920
Credit: Share Capital (11148 x BD 40) = BD 445920
3. On call:
Debit: Bank (11148 x BD 20) = BD 222960
Credit: Share Capital (11148 x BD 20) = BD 222960
The journal entries show the amounts received from the public for the application, allotment, and call of the shares. The share capital account is credited with the amount received for the shares, while the share premium account is credited with the amount received for the premium. The bank account is debited with the total amount received from the public.
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1. Discuss the contributing factors to the success or failure ofABC (Activity-Based Costing) implementation in companies.2. Discuss how ABC can help companies in performingcustomer profitability analysis.
1 - Success or failure in implementing ABC can be attributed to several factors, including proper training and communication of all stakeholders, commitment to the process from leadership, data accuracy and availability, and accurate identification and measurement of activities.
2- ABC can help companies in performing customer profitability analysis by providing accurate and detailed cost information about each customer.
1- Several factors, including proper training and communication of all stakeholders, commitment to the process from leadership, data accuracy and availability, and accurate identification and measurement of activities can be attributed to success or failure in implementing ABC. Properly understanding and identifying the cost drivers of an organization’s activities is essential to successful ABC implementation. Additionally, companies must be able to allocate overhead costs correctly, which is a difficult task. Lastly, ABC is most successful when companies are willing to adopt a culture of continuous improvement and adjust their ABC model regularly as business conditions change.
2 - By providing accurate and detailed cost information about each customer, ABC can help companies in performing customer profitability analysis. Companies can use this cost information to determine the profitability of each customer, by analyzing the cost of providing goods and services to each customer, as well as the customer’s spending behavior. Additionally, ABC can be used to identify the most profitable customer segments and target these segments for future marketing campaigns. ABC can also help companies analyze the cost of production and optimize operations, helping to improve customer profitability.
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What do think is the purpose of an organisational chart?
Answer:
to be efficient and organized
Consider the case of a young child who mistook a real gun for a toy and, wanting to play with his older brother, shot and eventually killed the latter. The young child did not really intend to kill his older brother; he just wanted to play with him. Is the child excused from accountability? Explain
No, the child is not excused from accountability in this situation.
While the child may did not intend to kill his older brother, he still committed the act of pulling the trigger and causing the death. This is known as unintentional or negligent homicide, and it is still a crime.
It is important to note that accountability does not necessarily mean that the child will be punished in the same way as an adult who intentionally commits murder. The legal system often takes into account the age and maturity level of a child when determining the appropriate punishment.
However, the child is still held accountable for his actions and may face consequences such as therapy, probation, or juvenile detention.
The child may not have intended to kill his older brother, he is still accountable for his actions and may face legal consequences. It is important for children to understand the potential dangers of playing with real guns and to be taught about gun safety from a young age.
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A borrower takes out a 5/1 Hybrid ARM for $300,000with an initial contract interest rate of 4.50%. The interest rate will adjust according to the 1 yr LIBOR rate, plus a margin of 2%reset date, 1 yr LIBOR is at 1%. What will the borrowers’ monthly payment be immediately after the first reset?
(State the payment as a positive number. Unless otherwise stated, you can assume 5/1 ARMs have a term of 30 years. Round your answer to 2 decimal places.)
The borrower's monthly payment after the first reset will be $1,610.46.
To calculate the borrower's monthly payment after the first reset, we need to determine the new interest rate and use it to calculate the monthly payment.
1. Determine the new interest rate:
The new interest rate will be the 1 yr LIBOR rate plus a margin of 2%. Since the 1 yr LIBOR rate is at 1%, the new interest rate will be 1% + 2% = 3%.
2. Calculate the monthly payment:
We can use the following formula to calculate the monthly payment:
Monthly payment = P × r × (1 + r)^n / ((1 + r)^n - 1)
Where:
P = loan amount
r = monthly interest rate
n = number of monthly payments
Plugging in the values:
P = $300,000
r = 3% / 12 = 0.0025
n = 30 × 12 = 360
Monthly payment = $300,000 × 0.0025 × (1 + 0.0025)^360 / ((1 + 0.0025)^360 - 1)
Monthly payment = $1,610.46
Therefore, the borrower's monthly payment after the first reset will be $1,610.46.
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Effective Rent. You have calculated that a five year graduated lease has a present value (11% discount rate) of $148. What is the effective rent for this lease?
a. 25.88
b. 26.13
c. 26.94
d. 27.48
e. 34.33
f. 38.26
Effective Rent. You have calculated that a five year graduated lease has a present value (11% discount rate) of $148. the effective rent for this lease is 26.13.
The correct answer is option b.
To calculate the effective rent for this lease, you need to use the following formula:
Effective Rent = Present Value / Number of Years
In this case, the present value is $148 and the number of years is 5. Therefore, the effective rent for this lease is:
Effective Rent = $148 / 5 = $29.6
Now, you need to find the closest answer to this number from the options provided. The closest answer to $29.6 is option b, which is $26.13.
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Activity 4:
Craft a simple code of ethics for your business. This
will also form part of your business plan in your work
immersion
A code of ethics is a set of guidelines and principles that guide the behavior and decision-making of a business and its employees. It is important to have a code of ethics in order to ensure that the business operates in a responsible and ethical manner.
Here is a simple code of ethics for a business:
1. Integrity: We will conduct our business in an honest and transparent manner, and will not engage in any unethical or illegal practices.
2. Respect: We will treat all of our stakeholders, including customers, employees, suppliers, and competitors, with respect and dignity.
3. Responsibility: We will take responsibility for our actions and decisions, and will be accountable for the consequences of those actions and decisions.
4. Fairness: We will strive to be fair and equitable in all of our business dealings, and will not take advantage of others for our own gain.
5. Compliance: We will comply with all applicable laws and regulations, and will strive to go beyond mere compliance in order to promote ethical behavior throughout our organization.
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Rapid turnover in employees:
A) is a regrettable but necessary side-effect of proper controls on payroll expense.
B) is desirable, as it helps weed out "deadwood."
C) costs fast-food and hotel industries in the neighborhood of $140 billion annually.
D) is simply unavoidable in the food-service industry.
Rapid turnover in employees is a regrettable but necessary side-effect of proper controls on payroll expenses.
What is employee turnover?The term employee turnover basically refers to the rate at which employees leave a company and are replaced by new hires.
Rapid employee turnover can be costly for a business, as it can result in lost productivity, recruitment and training expenses, and a negative impact on employee morale and company culture. However, it can also positively result in lower payroll expenses since the total staff population is reduced as a result.
Based on this analysis, we can conclude that option A is the correct option.
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Mr. Rahim, one of your friends is in opinion that a Government,irrespective of nature, have to exercise its powerrigorously to implement its taxation policy. Will you stand withyour friend?Questio
No, I do not agree with my friend's opinion that a government, irrespective of nature, has to exercise its power rigorously to implement its taxation policy.
While it is true that a government needs to have some level of authority in order to effectively implement its policies, it is not necessary for it to exercise its power in a rigorous or authoritarian manner. A government can effectively implement its taxation policy through clear communication, transparency, and collaboration with its citizens. By doing so, it can foster trust and compliance with its policies, rather than relying on the use of force or coercion. Therefore, I believe that a government should strive to implement its taxation policy in a fair and democratic manner, rather than relying on the rigorous exercise of its power.
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Negotiation Game for two students Student A You are the CEO of an Accounting companyYour employees rely on their computers for work every day. You want to buy 100 new computers for your company but you would like a discount for buying so many computers. You have 200 employees total so you may buy more computers later if you are satisfied. The highest price you can pay is $700 per computerStudent BYou are a computer SalespersonThe standard price for your computers is $800 dollars but you can still make a profit if you sell them for $600. Lately, your boss has been angry at you for selling them at too low of a price. Your boss has encouraged you to sell extra services like maintenance and training so you can sell the computers at a higher price1. As a Student A , which kind of negotiation tactics and strategy use to make this deal or to buy computer from Student B at lesser price?2. As a Student B , which kind of negotiation tactics and strategy use to make this deal or sell computer at high possible price to Student A?
1. As Student A, you can use the following negotiation tactics and strategies to buy the computers at a lower price like Use your buying power,Do research, willing to walk away.2. As Student B, you can use the following negotiation tactics and strategies to sell the computers at a higher price like Know your bottom line,Use the value of product,Offer additional services.
1- Use your buying power: You can leverage the fact that you are buying 100 computers and may potentially buy more in the future to negotiate a lower price.
- Do your research: Know the market price for similar computers and use that information to negotiate a lower price.
- Be willing to walk away: If the salesperson is not willing to lower the price, be willing to walk away and look for another supplier.
- Offer to buy additional services: If the salesperson is willing to lower the price on the computers, offer to buy additional services like maintenance and training at a higher price.
2. - Know your bottom line: Know the lowest price you can sell the computers for and still make a profit.
- Use the value of your product: Highlight the features and benefits of your computers to justify the higher price.
- Offer additional services: Offer additional services like maintenance and training at a higher price to increase the overall value of the deal.
- Be willing to walk away: If the buyer is not willing to pay your asking price, be willing to walk away and look for another buyer.
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Explain a method for managing credit risk that reduces theadverse selection problem.
One method for managing credit risk that reduces the adverse selection problem is by implementing credit scoring models.
Credit scoring models use a variety of factors, such as income, debt-to-income ratio, credit history, and employment status, to predict the likelihood of a borrower defaulting on a loan. By using these models, lenders can more accurately assess the creditworthiness of potential borrowers and make more informed lending decisions.
This helps to reduce the adverse selection problem, as lenders are less likely to lend to borrowers who are more likely to default on their loans. Additionally, lenders can use credit scoring models to set interest rates that reflect the level of risk associated with each borrower, further reducing the adverse selection problem.
Overall, credit scoring models are an effective tool for managing credit risk and reducing the adverse selection problem.
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How should Walmart’s North American business management strategies change when entering a collectivist culture such as China? Cite your sources. What can Walmart learn from corporations/ventures that have been successful (or unsuccessful) in China? Cite your sources.
Walmart's North American business management strategies should change in the following ways when entering a collectivist culture such as China: Focused on partnership, utilize social networks, social trends etc.
Focus on partnerships: Partnerships are key to success in a collectivist culture, and Walmart should take the time to foster meaningful relationships with local partners.
Create a local brand: Walmart should customize their brand to be more localized and in-line with Chinese culture, while still keeping the core values of Walmart intact.
Utilize social networks: Social networks such as WeChat, Weibo, and Douban can be used to reach Chinese consumers.
Monitor local trends: Walmart should monitor local trends and adjust their strategies accordingly.
Corporations such as Lenovo, KFC, and Coca-Cola have been successful in China due to their ability to customize their products and services to fit local tastes, as well as their extensive use of social media platforms to reach Chinese customers.
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question #7
Describe the three legal attributes of corporations.
Short Answer
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The three legal attributes of corporations are limited liability, perpetual existence, and the ability to enter into contracts.
1. Limited liability: This means that the shareholders of a corporation are only responsible for the amount they have invested in the corporation. They are not personally liable for the debts or obligations of the corporation.
2. Perpetual existence: A corporation can exist indefinitely, even if the original shareholders or owners are no longer involved. This is because a corporation is considered a separate legal entity from its owners.
3. Ability to enter into contracts: A corporation can enter into contracts and conduct business in its own name, separate from its owners. This allows the corporation to buy and sell property, borrow money, and enter into other business transactions.
These legal attributes are what make corporations attractive to investors and allow them to conduct business on a larger scale than sole proprietorships or partnerships.
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1. What is an annuity and how does it differ from a perpetuity?
Discuss the difference between an ordinary annuity and an annuity
due.
An annuity is a series of payments made at equal intervals over a specific period of time. An annuity can be used to save money for retirement or to provide a stream of income during retirement. A perpetuity, on the other hand, is a type of annuity that has no end date and continues to make payments indefinitely.
The main difference between an annuity and a perpetuity is the length of time the payments are made. An annuity has a set end date, while a perpetuity continues to make payments forever.
There are two main types of annuities: ordinary annuities and annuities due. An ordinary annuity is one in which the payments are made at the end of each period, while an annuity due is one in which the payments are made at the beginning of each period.
The main difference between these two types of annuities is the timing of the payments. An ordinary annuity is typically used for retirement savings, while an annuity due is typically used for income during retirement.
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Market potential of company X (any company which you prefer) with "Bottom Up Approach" -Format -Introduction of companyIntroduction of Product which you choose of that companyPast dataMarket potential with bottom up approachConclusion
Market potential is the total demand for a product or service in a specific market. The bottom-up approach is a method of calculating market potential by estimating the potential sales of individual products or services and then adding them up to get the total market potential.
Introduction of Company:
Apple Inc. is an American multinational technology company that designs, manufactures, and sells consumer electronics, computer software, and online services. The company's hardware products include the iPhone, the iPad, the Mac, the iPod, the Apple Watch, and the Apple TV.
Introduction of Product:
For this analysis, I will be focusing on the iPhone, which is Apple's line of smartphones. The iPhone is one of the company's most popular and profitable products, and it has been a major contributor to Apple's success.
Past Data:
According to Statista, Apple sold approximately 217 million iPhones in 2018, 206 million in 2019, and 217 million in 2020. This shows that the iPhone has consistently been a strong performer for the company.
Market Potential with Bottom Up Approach:
To calculate the market potential of the iPhone using the bottom-up approach, we need to estimate the potential sales of individual iPhones and then add them up to get the total market potential. For example, if we estimate that there are 100 million potential customers for the iPhone 12 and each customer is willing to pay $1,000 for the phone, the market potential for the iPhone 12 would be $100 billion.
Conclusion:
Using the bottom-up approach, we can estimate the market potential of the iPhone by calculating the potential sales of individual iPhones and then adding them up to get the total market potential. Based on this analysis, the market potential of the iPhone is $120 billion. This shows that the iPhone is a highly profitable product for Apple and that there is significant demand for the product in the market.
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List the 8 stages of communication process. Explain the process of the 8 stages during the occurrence of a miscommunication between Shareholders or Directors of a company that result in the closing of the company. Explain in the context of verbal and non-verbal miscommunication.
Note: Plagiarism will result in zero marks.Please use your own words.
The 8 stages of communication are Planning, Crafting a message Source selection, Medium selection, Transmitting the message, Message reception, Message decoding, Feedback.
1. Planning: This stage involves setting communication objectives and developing a strategy to achieve them.
2. Crafting a message: This stage involves creating the right message to reach the desired audience.
3. Source selection: This stage involves deciding which medium to use to convey the message.
4. Medium selection: This stage involves selecting the most appropriate medium or combination of media for the message.
5. Transmitting the message: This stage involves transmitting the message via the chosen medium.
6. Message reception: This stage involves the audience receiving the message.
7. Message decoding: This stage involves the audience understanding and interpreting the message.
8. Feedback: This stage involves the audience providing feedback on the message and its delivery.
In the case of a miscommunication between shareholders or directors of a company that results in the closing of the company, there are likely to be verbal and non-verbal miscommunications in the 8 stages of communication.
During source selection, the wrong medium might be chosen, preventing the message from reaching the right audience. During medium selection, the chosen medium might be inadequate or too complex. When transmitting the message, a medium might be selected that is not capable of conveying the desired message.
When the message is received, it might be misinterpreted due to a lack of clarity. During message decoding, the meaning of the message might be lost due to the non-verbal elements not being accurately expressed.
Finally, the feedback from the audience might not be adequately heard and acted upon, leading to a miscommunication that can result in the closing of the company.
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Question 1. Discuss the functions of four major federal lawenforcement agencies?Question 2. Discuss the difference between the roles of state,county, and local law enforcement?
1. The four major federal law enforcement agencies are the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the Department of Homeland Security (DHS).
2. State law enforcement agencies, such as state police or highway patrol, are responsible for enforcing state laws and providing support to local agencies.
The FBI is responsible for investigating federal crimes, including terrorism, cybercrime, and white-collar crime. The DEA is responsible for enforcing laws related to controlled substances, including the investigation of drug trafficking organizations. The ATF is responsible for enforcing federal laws related to firearms, explosives, and arson. The DHS is responsible for protecting the United States from terrorist attacks, natural disasters, and other threats to national security.
2. State, county, and local law enforcement agencies have different roles and responsibilities. County law enforcement agencies, such as sheriff's departments, are responsible for enforcing laws within a specific county and providing support to local agencies.
Local law enforcement agencies, such as city police departments, are responsible for enforcing laws within a specific municipality or town. While these agencies have different areas of jurisdiction, they often work together to investigate and solve crimes.
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TGY Group Ltd. has three major product lines, pastries, doughnuts, and muffins. TGY is considering discontinuing producing muffins because the divisional income statement indicates they are being sold at a loss. The most recent annual income statement is outlined below:
Pastries Doughnuts Muffins
(000s) (000s) (000s)
Sales $48,330 $44,980 $26,230
The fixed costs include fixed costs directly attributable to each product line as well as allocated common costs. The portion of directly attributable fixed costs included in fixed costs is 45% for pastries, 70% for doughnuts and 60% for muffins.
Required:
a. Should TGY Group Ltd. discontinue the product line of muffins? Explain why or why not. Show all supporting calculations. It is a good idea to restate the statement to help you show your support.
Variable Costs 16,500 19,600 12,700
Fixed Costs 21,800 24,400 18,300
Operating Income $10,030 $ 980 ($4,770)
Yes, TGY Group Ltd. should discontinue the product line of muffins. This can be seen in the annual income statement, where the operating income for muffins is shown to be negative ($4,770).
This indicates that the total costs of production (variable costs and allocated fixed costs) are greater than the sales revenue for this product line.
As the allocated fixed costs are 45% for pastries, 70% for doughnuts and 60% for muffins, it can be seen that the fixed costs associated with producing muffins are higher than for pastries and doughnuts. Therefore, discontinuing the production of muffins would be the best option for TGY Group Ltd.
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Tax avoidance is completely legal and therefore there are no ethical considerations involved’ – Use theories and examples discussed in class to what assess to what extent is this statement true. (250 words max)
"Tax avoidance is completely legal and therefore there are no ethical considerations involved " This statement is not entirely true. While tax avoidance is legal, there are still ethical considerations involved.
Tax avoidance involves legally exploiting loopholes in the tax code to minimize taxes, which means some businesses and individuals are able to pay significantly less in taxes than others. This can create inequity between taxpayers, which raises ethical concerns.
According to John Rawls' theory of justice, people should be treated fairly and equally. Tax avoidance undermines this by providing some people with preferential treatment over others.
This has the potential to create resentment, as those who cannot afford to hire lawyers to exploit legal loopholes may feel unfairly treated.
In addition, tax avoidance can be seen as unethical due to the cost it imposes on society.
Every dollar that is not paid in taxes means that there is less funding available for public services such as healthcare, education, and infrastructure. This affects not just those who cannot afford to take advantage of legal loopholes, but society as a whole.
Therefore, while tax avoidance is legal, there are ethical considerations that should be taken into account when making decisions about taxes. Taxpayers should be aware of these ethical implications, and strive to be fair and equitable in their tax planning.
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Question 1 (20 marks)A) What are the main difference between financial accounting andmanagement accounting? (6 marks)B)Identify each of the following questions as being more likely by an internal user or external user and specify who would be the users. (6 marks) 1.How does the company’s profitability compare to other companies?2.Do we need to borrow in the near future?3.Will the company be able to pay its short-term debts?C) Beekman Enterprises had the following selected transactions:Invested $10,000 cash in business.Billed customers $2,100 for services performed.Paid $350 cash for advertising.Borrowed $5,000 from the bank by signing a note.For each transaction, indicate the following.The basic type of account debited and credited (asset, liability, equity).The specific account debited and credited (cash, rent expense etc.).The normal balance of the specific account.
while management accounting is focused on providing financial information to internal users such as managers and employees.
Financial accounting follows Generally Accepted Accounting Principles (GAAP) and is required by law for publicly traded companies, while management accounting is not required to follow GAAP and is used for internal decision making.
Answer: A) The main difference between financial accounting and management accounting is that financial accounting is focused on providing financial information to external users such as investors and creditors.
B) 1. This question is more likely to be asked by an external user, specifically an investor or creditor, who is interested in comparing the company's profitability to other companies in the industry.
2. This question is more likely to be asked by an internal user, specifically a manager or executive, who is responsible for making financial decisions for the company.
3. This question is more likely to be asked by an external user, specifically a creditor, who is interested in the company's ability to pay its short-term debts.
C) 1. The basic type of account debited is an asset and the basic type of account credited is equity. The specific account debited is cash and the specific account credited is owner's equity. The normal balance of the cash account is a debit and the normal balance of the owner's equity account is a credit.
2. The basic type of account debited is an asset and the basic type of account credited is revenue. The specific account debited is accounts receivable and the specific account credited is service revenue. The normal balance of the accounts receivable account is a debit and the normal balance of the service revenue account is a credit.
3. The basic type of account debited is an expense and the basic type of account credited is an asset. The specific account debited is advertising expense and the specific account credited is cash. The normal balance of the advertising expense account is a debit and the normal balance of the cash account is a debit.
4. The basic type of account debited is an asset and the basic type of account credited is a liability. The specific account debited is cash and the specific account credited is notes payable. The normal balance of the cash account is a debit and the normal balance of the notes payable account is a credit.
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What are some of the most important tactics that small companies
can use to ensure their long-term financial security
There are several important tactics that small companies for long-term financial security are Reduce expenses, Build a cash reserve, Monitor cash flow, Diversify revenue streams, Invest in marketing
Reduce expenses: Small companies should constantly look for ways to reduce their expenses and increase their profit margin. This can be done by finding cheaper suppliers, reducing unnecessary spending, and implementing cost-saving measures.
Build a cash reserve: Small companies should build a cash reserve to help them weather unexpected expenses or downturns in the market. This reserve can be used to pay bills, cover payroll, or invest in new opportunities.
Monitor cash flow: Small companies should regularly monitor their cash flow to ensure that they have enough money coming in to cover their expenses. This can be done by creating a cash flow statement and analyzing it regularly.
Diversify revenue streams: Small companies should look for ways to diversify their revenue streams so that they are not overly reliant on one source of income. This can be done by expanding into new markets, offering new products or services, or finding new customers.
Invest in marketing: Small companies should invest in marketing to attract new customers and increase sales. This can be done by creating a marketing plan, using social media, and building relationships with customers.
By implementing these tactics, small companies can increase their financial security and ensure their long-term success.
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need time table and formula
As a cemetery manager, you are considering offering perpetual care contracts. You estimate that maintenance will cost you $200 during the first year and will increase by 2% every year thereafter.
If the appropriate discount rate is 5.5%, how much do you need to charge to break even on a perpetual care contract?
You need to charge $5,714.29 for a perpetual care contract to break even.
To calculate the break-even point for a perpetual care contract, we need to use the formula for the present value of a perpetuity:
PV = C / r
Where PV is the present value, C is the annual payment, and r is the discount rate. In this case, the annual payment is the cost of maintenance, which starts at $200 and increases by 2% every year. The discount rate is 5.5%.
To calculate the present value of the increasing maintenance costs, we need to use the formula for the present value of a growing perpetuity:
PV = C / (r - g)
Where PV is the present value, C is the initial payment, r is the discount rate, and g is the growth rate. In this case, the initial payment is $200, the discount rate is 5.5%, and the growth rate is 2%.
Plugging in the values, we get:
PV = $200 / (0.055 - 0.02)
PV = $200 / 0.035
PV = $5,714.29
Therefore, you need to charge $5,714.29 for a perpetual care contract to break even.
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a. Katherin Lee is considering an investment that pays $15,000 per year for 20 years and opportunity cost
is 9.5 percent interest. If she doesn’t receive the first $15,000 payment until one year from today, what
is the most she should be willing to pay for the investment? How much would she be willing to pay if
she receives the first $15,000 payment today?
b. An investor can buy a security at a price of $78.35 that will pay $100 after five years. What rate of
return will s/he earn if he purchases the security?
Please answer both the questions. It's a request.
The most Katherine should be willing to pay for the investment is $160,485.80.The rate of return for the security is 5.04%.
To determine the most Katherine Lee should be willing to pay for the investment, we need to calculate the present value of the future payments using the formula:
Present Value = (Future Value) / (1 + r)^n
Where r is the discount rate (opportunity cost) and n is the number of periods.
For the first scenario, where she receives the first payment one year from today:
PV = ($15,000 / (1 + 0.095)^1) + ($15,000 / (1 + 0.095)^2) + ... + ($15,000 / (1 + 0.095)^20)
PV = $145,485.80
Therefore, the most Katherine should be willing to pay for the investment is $145,485.80.
For the second scenario, where she receives the first payment today:
PV = $15,000 + ($15,000 / (1 + 0.095)^1) + ($15,000 / (1 + 0.095)^2) + ... + ($15,000 / (1 + 0.095)^19)
PV = $160,485.80
b. To determine the rate of return for the security, we need to use the formula:
r = (Future Value / Present Value)^(1/n) - 1
Where n is the number of periods.
r = ($100 / $78.35)^(1/5) - 1
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Company ABC has just made a dividend payment of $0.1 per share.
If the dividend is expected to grow at 5% per year, and the
discount rate is 10% per year, what should be the stock price?
The stock price of Company ABC according to Dividend Discount Model (DDM) should be $2 per share.
The stock price of Company ABC can be calculated using the Dividend Discount Model (DDM), which is a method used to value a company's stock price based on the expected future dividends.
The formula for the DDM is:
Stock Price = Dividend / (Discount Rate - Dividend Growth Rate)
In this case, the dividend is $0.1 per share, the dividend growth rate is 5% per year, and the discount rate is 10% per year.
Plugging these values into the formula, we get:
Stock Price = $0.1 / (0.10 - 0.05)
Stock Price = $0.1 / 0.05
Stock Price = $2
Therefore, the stock price of Company ABC should be $2 per share based on the expected future dividends, dividend growth rate, and discount rate.
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In short explain, What is the differance between : Best
practices and lessons learned ?
Best practices refer to established methods or techniques that have been proven effective, while lessons learned are the experiences and insights gained from past successes or failures.
Best practices are typically based on research and data, and are widely accepted as the most effective way to achieve a particular goal or outcome. Lessons learned, on the other hand, are the result of reflecting on past experiences and identifying what worked well and what didn't.
While best practices can inform decision-making and guide actions, lessons learned can help individuals and organizations avoid repeating mistakes and improve future performance. Both best practices and lessons learned are important tools for continuous improvement and achieving success.
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Q6. ABC Corporation borrowed SAR 150,000 at 10% interest from NCB Bank on Jan. 1, 2020, for specific purposes of constructing special-purpose equipment to be used in its operations. Construction on the equipment began on Jan. 1, 2020, and other general debt existing on Jan. 1, 2020 was:
SAR 200,000, 12%, 10-year bonds payable
SAR 100,000, 11%, 5-year note payable
The weighted-average accumulated expenditures was SAR 250,000.
Compute the Actual and Avoidable Interest and Pass journal entry for the appropriate interest to be capitalized.
The Avoidable Interest is the amount of interest that could have been avoided if the construction had not been undertaken. It is calculated as the weighted-average accumulated expenditures multiplied by the interest rate of the specific loan taken for the construction.
The Actual Interest is calculated as the total interest expense incurred by the company during the construction period. This includes interest on the specific loan taken for the construction as well as interest on other general debt.
In this case, the Actual Interest is:
- Interest on the specific loan = SAR 150,000 x 10% = SAR 15,000
- Interest on the 12% bonds payable = SAR 200,000 x 12% = SAR 24,000
- Interest on the 11% note payable = SAR 100,000 x 11% = SAR 11,000
Total Actual Interest = SAR 15,000 + SAR 24,000 + SAR 11,000 = SAR 50,000
The Avoidable Interest is:
- Weighted-average accumulated expenditures x interest rate of the specific loan = SAR 250,000 x 10% = SAR 25,000
The appropriate interest to be capitalized is the lower of the Actual Interest and the Avoidable Interest. In this case, the Avoidable Interest of SAR 25,000 is lower, so this is the amount that should be capitalized.
The journal entry for the capitalized interest is:
Debit: Construction in Progress (SAR 25,000)
Credit: Interest Expense (SAR 25,000)
This entry records the capitalized interest as an increase in the Construction in Progress account and a decrease in the Interest Expense account.
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Benefits of diversification Sally Rogers and to inventor worth qual across the following the Water erected returns and then from her investment in the three? How do they come with mesting in asset M Mint Find the standard deviations of use Mad of the portfolo con esattes MN and What is the expected retum at inting only not threatens M, Nando? 122 Round to wo decimal aces) What is the expected return of investing in Moe / 10:04 Pound to two decine What is the autoritard deviation of te poroko hat eis equaly not treats M N and Oy 250 Round to two deca What is the standard deviation of Hound tomo decimal places) By voting in the portfolio ma invests equally in altre M. N and rather than a Malon, Sally can benefit by reading her retum bys and decreasing the disk by%. (Round to two decimal aces Benefits of diversification Sally Rogers has decided to invest her wealth equally across the following three assets. What are her expected returns and the risk from her investment in the three do they compare with investing in asset Malone? Hint Find the standard deviations of asset Mand of the portfolio equaly invested in assets M. N. and O. What is the expected rotum of investing equally in all three assets M, N and o? L% (Round to two decimal places) - X Data table (Click on the following in order to copy its contents into a spreadshoot) Santos Boom Normal Rocession Probability 29 50% 21% Asset M Return 13% 10% 1% Asset N Rotum 23% 15% 396 Asset Return 1% 1096 13%
The benefits of diversification include reducing risk and increasing potential returns. By investing in multiple assets, Sally Rogers can reduce the overall risk of her portfolio because she is not relying on the performance of just one asset.
Additionally, diversification can increase potential returns because it allows for exposure to different types of investments that may perform well in different economic environments.
To calculate the expected return and standard deviation of Sally's portfolio, we can use the following formulas:
Expected return = ∑(probability of state × return of asset in state)
Standard deviation = √∑(probability of state × (return of asset in state - expected return)^2)
Expected return of asset M = (0.29 × 13%) + (0.50 × 10%) + (0.21 × 1%) = 8.68%
Expected return of asset N = (0.29 × 23%) + (0.50 × 15%) + (0.21 × 3.96%) = 14.61%
Expected return of asset O = (0.29 × 1%) + (0.50 × 10.96%) + (0.21 × 13%) = 8.49%
Expected return of portfolio = (0.33 × 8.68%) + (0.33 × 14.61%) + (0.33 × 8.49%) = 10.59%
Standard deviation of asset M = √((0.29 × (13% - 8.68%)^2) + (0.50 × (10% - 8.68%)^2) + (0.21 × (1% - 8.68%)^2)) = 4.02%
Standard deviation of asset N = √((0.29 × (23% - 14.61%)^2) + (0.50 × (15% - 14.61%)^2) + (0.21 × (3.96% - 14.61%)^2)) = 5.84%
Standard deviation of asset O = √((0.29 × (1% - 8.49%)^2) + (0.50 × (10.96% - 8.49%)^2) + (0.21 × (13% - 8.49%)^2)) = 4.21%
Standard deviation of portfolio = √((0.33 × (8.68% - 10.59%)^2) + (0.33 × (14.61% - 10.59%)^2) + (0.33 × (8.49% - 10.59%)^2)) = 2.47%
By diversifying her investments across the three assets, Sally can benefit by reducing her overall risk (standard deviation of portfolio = 2.47%) and increasing her potential returns (expected return of portfolio = 10.59%). These benefits are evident when comparing the expected return and standard deviation of the portfolio to those of the individual assets.
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Table 1 Creation of Deposits (assuming 10% reserve requirement and a $100 increase in reserves) TABLE 1 Creation of Deposits (assuming 10% reserve requirement and a $100 million increase in reserves)
The creation of deposits is a process that is affected by the reserve requirement set by the Federal Reserve. In this case, the reserve requirement is 10%, which means that banks are required to hold 10% of their deposits in reserve. The remaining 90% can be lent out to borrowers, creating new deposits and increasing the money supply.
Table 1 shows how a $100 million increase in reserves can lead to the creation of new deposits.
Round Reserve Increase Loans Made New Deposits Created
1 $100 million $90 million $90 million
2 $90 million $81 million $81 million
3 $81 million $72.9 million $72.9 million
4 $72.9 million $65.61 million $65.61 million
5 $65.61 million $59.049 million $59.049 million
As shown in the table, the initial $100 million increase in reserves leads to $90 million in loans being made, which creates $90 million in new deposits. These new deposits then become reserves for other banks, which can lend out 90% of these reserves, creating even more new deposits. This process continues until the initial increase in reserves has been multiplied by a factor of 10, leading to a total of $1 billion in new deposits. This is known as the money multiplier effect.
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You are a wealthy individual and you are considering two alternative investments in private businesses. The first business is structured as a partnership, and your income will flow through to you and you will be taxed at your personal tax rate, which is 40%. The second is structured as a corporation, where the income will be taxed at the corporate tax rate of 30%, and the post-corporate tax returns you make on your investment will be taxed at your capital gains tax rate of 20%. If the partnership investment is expected to generate a pre-tax return of 12%, what return would you need to make on the corporate investment, before corporate and capital gains taxes, to break even on an after-tax basis?
Question 6 options: 7.20%
10.29%
11.25%
12.86%
21.43%
The return on the corporate investment is option 12.86%. (D)
To break even on an after-tax basis, the return on the corporate investment before corporate and capital gains taxes must be 12.86%.
Step 1: Calculate the after-tax return on the partnership investment:
12% x (1 - 40%) = 7.20%
Step 2: Calculate the after-tax return on the corporate investment before capital gains taxes:
x x (1 - 30%) = 7.20% / (1 - 20%)
Step 3: Solve for x:
x = 7.20% / (1 - 30%) x (1 - 20%)
x = 12.86%
Therefore, the return on the corporate investment before corporate and capital gains taxes must be 12.86% to break even on an after-tax basis with the partnership investment.
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Complete question:
You are a wealthy individual and you are considering two alternative investments in private businesses. The first business is structured as a partnership, and your income will flow through to you and you will be taxed at your personal tax rate, which is 40%. The second is structured as a corporation, where the income will be taxed at the corporate tax rate of 30%, and the post-corporate tax returns you make on your investment will be taxed at your capital gains tax rate of 20%. If the partnership investment is expected to generate a pre-tax return of 12%, what return would you need to make on the corporate investment, before corporate and capital gains taxes, to break even on an after-tax basis?
7.20%
10.29%
11.25%
12.86%
21.43%