Answer: B. Record revenue that will be received in cash in a subsequent period.
Explanation: Accrual Accounting is a method that records transactions when they have inccured. Instead of when the cash is exchanged.
A. Incorrect. Impossible to record in earlier periods. As the past financial statements from previous years have already been closed off.
B. Correct. Accrued accounting entails recording the transaction when it has occurred. So the cash will be recorded as received. However the cash will only be transferred to the revenue account when the obligation has been met. Therefore it will only be transferred to revenue in the period that it applies to.
C. Incorrect. This is already general expense and general accounting rules apply. I.e. The expense is incurred in the same year and paid out in the same year. This is how most income and expenses are treated, except for prepaid and accrual income and expenses.
D. Incorrect. This is an example of a prepaid expense. Prepaid expenses are expenses that have already been paid even though they haven't been inccured yet. This is an asset, and is thus recorded on the debit side.
Answer:
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Explanation:
Answer:
c. LeMond's net fixed assets as shown on the balance sheet will be higher at the end of the year.
Explanation:
Provided information,
There is a purchase of new production line. On which the company plans to charge depreciation as per straight line method for 5 years. As per the recent amendment the company has to charge depreciation fr 7 years under straight line method.
Thus, depreciation per year will be decreased.
As depreciation is an expense which is going to decrease with increase in duration, therefore, income will increase and accordingly taxes will increase.
Also the net balance of fixed assets will be higher, as depreciation is less.
Therefore, correct statement is
c. LeMond's net fixed assets as shown on the balance sheet will be higher at the end of the year.
Answer:
increase by 400 billion dollars
Explanation:
marginal propensity to consume = mpc
tax multiplier = -mpc/1-mpc
from our question we were given mpc to be 0.8
-0.8/1-0.8
= -0.8/0.2
= -4
change in output = -4(-100)
= 400 billion dollars
for a $100 tax decrease, output will increase by $100 billion x 4
= $400 billion
This question is a bit tricky to answer because it does not state how often interest rate is applied so lets say for the simple 5% interest rate the rate of interest was calculated after 2 years you would pay a total interest of $15 since interest was only calculated once but for the 3% calculating every year with compound it would be a total of 18.27 dollars in interest but then you would have to calculate the 5% simple interest the same way which would total to $30 if calculated once a year being more than the 3% compound. But lets say interest is calculated once a month your total for the 5% simple interest would be $360 dollars interest for those 2 years and the 3% compound would be $406.97 dollars in interest. So over all the less amount of times interest compounds the less interest there is making it more worth than the simple but if the compounding occurs more frequently the simple 5% interest is more worth it. In this situation I think it might just be yearly interest which makes the 3% compound more worth taking for this short amount of time.
