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Colt1911 [192]
3 years ago
14

Gerald’s manufacturing firm sold goods worth $6,000 to some customers on credit in the month of January. His customers plan to p

ay him the entire amount at once in March. Gerald plans to record and recognize this income in the business’s accounts in March. Which accounting method does Gerald’s business follow?
His business follows the _______method of accounting.
Business
1 answer:
GREYUIT [131]3 years ago
3 0

Answer:

The cash accounting systems

Explanation:

The cash accounting systems recognize incomes and expenses when paid is received, or when payments are made. Revenue is recorded when customers make payments against an invoice, and expenses recorded when the business pays its payable. The cash accounting system is also called cash basis accounting.

The cash basis accounting system is mostly used by small business organizations.  Gerald's manufacturing firm uses the cash accounting system because transactions are recorded when money goes in or out of business. The cash basis is not recommended for large business organizations.

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Given the following changes what is the net effect on cash? (1) Accounts Receivables increases by $150; Inventory decreases by $
Karolina [17]

Answer:

Net Cash Increase of $115

Explanation:

Receivable Increases by $150 means a cash outflow in receivable by $150 because Increase in Receivable indicates that there are more sale on credit is made than cash received from the customers. So, the outflow in the receivable section is more than the inflow.

Inventory Decreases by $95 means the inventory sold during the period is more than purchases / manufactured. It result in cash inflow as cash is not being held in the form of inventory.

Accounts Payable increases by $225 means that company is making less payment to its suppliers, so that its balance has been increase. Company made more purchases than payment made to suppliers. Net cash Inflow is observed from this.

Common dividend payment of $55 means a direct cash outflow because actual cash has been paid during the year.

Net Effect on Cash = Cash inflows - Cash outflows

Net Effect on Cash = ( Inventory decrease + Accounts Payable increase ) - ( Accounts Receivables increase + Common dividend payment )

Net Effect on Cash = ( $95 + $225 ) - ( $150 + 55 )

Net Effect on Cash = $320 - $205

Net Effect on Cash = $115

Net Cash Increase of $115

6 0
3 years ago
This morning, DJ’s invested $238,000 to help fund a company expansion project planned for three years from now. How much additio
rusak2 [61]

Answer:

$3,842.78

Explanation:

We must determine the future value of the money invested and then calculate the difference between both return rates. We can use the future value formula: FV = present value x (1 + return rate)ⁿ

3.5% ⇒ FV = $238,000 x (1 + 3.5%)³ = $238,000 x 1.035³ = $263,874.85

4% ⇒ FV = $238,000 x (1 + 4%)³ = $238,000 x 1.04³ = $267,717.63

difference = $267,717.63 - 263,874.85 = $3,842.78

5 0
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Answer: equals sales revenue minus variable costs

           

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It is an important aspect of an organisation as it somehow depicts the ability of it to pay its fixed expenses like interests etc.

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