Proration occurs because it is impossible to accurately estimate the future overhead costs and production activity; it is either the overhead is over applied or under applied. The variance will have to be adjusted for at the end of the financial year.
Answer:
A. seek information about loans from the banks.
Explanation:
A loan can be defined as an amount of money that is being borrowed from a lender and it is expected to be paid back at an agreed date with interest.
Generally, the financial institution such as a bank lending out the sum of money usually requires that borrower provides a collateral which would be taken over in the event that the borrower defaults (fails) in the repayment of the loan.
An auditor refers to an authorized individual who review, examine and verify the authenticity and accuracy of business financial records or transactions.
An auditor ordinarily sends a standard confirmation request to all banks with which the entity it is auditing has done business during the year under audit, regardless of the year-end balance. One purpose of this procedure is to seek information about loans from the banks so as to examine and verify the amount that was loaned by the bank to the business entity, as well as comparing the figures (values) to that on the balance sheet.
Answer:
1./
INITIAL INVESTMENT
= $1600000
ANNUAL NET CASH FLOW
= NET INCOME + DEPERICATION
= $250000 + [($1600000 - $350000) / 8]
= $250000 + $156250
= $406250
SALVAGE VALUE
= $350000
NPV
= -$1600000 + $406250 * PVIFA 10%, 8 PERIODS + $350000 * PVIF 10% *PERIOD
= -$1600000 + $406250 * 5.3349 + $350000 * 0.4665
= -$1600000 + 2167303.13 + $163275
= $730578.13
2./
AS THE NPV IS GREATER THAN 0 OR POSITIVE THE IRR IS GREATER THAN 10%
3./
INITIAL INVESTMENT
= $1600000
ANNUAL NET CASH FLOW
= NET INCOME + DEPERICATION
= $250000 + [($1600000 - $350000) / 8]
= $250000 + $156250
= $406250
SALVAGE VALUE
= $350000
NPV
= -$1600000 + $406250 * PVIFA 20%, 8 PERIODS + $350000 * PVIF 20% *PERIOD
= -$1600000 + $406250 * 3.8372 + $350000 * 0.2326
= -$1600000 + $1558862.5 + $81410
= $40272.5
4./
AS THE NPV IS GREATER THAN 0 OR POSITIVE THE IRR IS GREATER THAN 20%
Explanation:
Answer:
Gross Domestic Product
= $500
<em>GDP is the final value of goods and services. The haircut is valued at $500 so is GDP. </em>
Net National Product:
= GDP - Depreciation
= 500 - 80
= $420
National Income
= $420
<em>This is the income that a resident of the country earns and $420 is what Barry earned in net income.</em>
Personal Income
= National income - Retained earnings
= 420 - 120 - 50
= $250
Disposable Personal Income (Dollars)
= Personal income - income taxes
= 250 - 90
= $160
