1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ratelena [41]
3 years ago
12

The following three independent sets of facts relate to contingent liabilities: 1. In November of the current year an automobile

manufacturing company recalled all pickup trucks manufactured during the past two years. A flaw in the battery cable was discovered and the recall provides for replacement of the defective cables. The estimated cost of this recall is $2 million. 2. The EPA has notified a company of violations of environmental laws relating to hazardous waste. These actions seek cleanup costs, penalties, and damages to property. The company is reasonably certain there will be cost associated with the cleanup, but cannot estimate the amount. The cleanup cost could be as high as $4,000,000 or as little as $500,000 and insurance could reimburse all or part of the cost. There is no way to more accurately estimate the cost to the company at this time. 3. Holland Company does not carry property damage insurance because of the cost. The company has suffered substantial losses each of the past three years. However, it has had no losses for the current year. Management thinks this is too good to be true and is sure there will be significant losses in the coming year. However, the exact amount cannot be determined.
Business
1 answer:
aalyn [17]3 years ago
5 0

Answer:

Situation 1 is a probably contingency. This recall is occurring and can be estimated as costing $2 million. This amount should be charge to the warranties payable and warranties expense accounts.

Date

Particulars

Ref.no

Debit $

Credit $

Warrantee expenses

20,00,000

Warranty payable account

20,00,000

[To record the estimated claims]

Comment

Step 3 of 3

Situation 2 is a reasonable contingency. The costs are possible and there are rough estimates for cleanup but there are also rough estimates about reimbursements for property damage. This situation would be disclosed on the balance sheet.

Situation 3 is a remote contingency. There is a small change that there could be property damage but there is no way to determine how much or what the costs could be. There is no amount marked down for this situation

Explanation:

You might be interested in
A revenue variance is the:
IceJOKER [234]

Answer: Option C

                   

Explanation: In simple words, revenue variance refers to the difference between the revenue one expects to earn as per the budget made for a specified period of time and the revenue it actually earned in that time.

Organisations calculate revenue variance to identify the reasons they are not performing well or the qualities they are performing more than expected.

This measure helps organisation in decision making as to whether they should make changes in their process, and if so then wheat changes, or should remain as they are.

6 0
3 years ago
How can you employ one of the most powerful interactive business tools on the<br> Internet today?
topjm [15]

Answer:

<em>Online shopping one of the most powerful interactive business tools on the Internet today.</em>

Explanation:

Today on internet most powerful interactive business tools is online marketing and shopping. The products and goods and services are easily available on internet and just with the help of delivery person anything can be easily delivered to the doorstep.

There are many intermediaries attached to this business and hence making it super profitable. Therefore, b to c business is on a boom these days and the customers needs are satisfied just sitting at home.

8 0
3 years ago
Read 2 more answers
The S&amp;P 500 Index is one of the most commonly used benchmark indices for the U.S. equity markets. Consisting of 500 companie
seropon [69]

Answer:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (<em>b). The outlook for the economy and the markets is for improvement. </em>

2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?  

Th e correct option is <em>(b). Portfolio risk   </em>

3. Generally, investors would prefer to invest in assets that have:  

a. A higher-than-average expected rate of return given the perceived risk

Explanation:

1. Based on my understanding of P/E ratios, in which of the following situations would the average trailing P/E ratio (current price divided by earnings per share over the previous 12 months) of the S&P 500 Index be higher?

Th e correct option is (<em>b). The outlook for the economy and the markets is for improvement. If the outlook of the economy and the market prospects of the stocks are for improvements, it then means that the Price Per Earning of the stock will be increasing, which is a positive economic trend.</em>

<em>Moreover, since we are talking about the average P/E it can be inferred that in the very long run, average of the S&P 500 Price to Earnings (PE) ratio (since 1900) is approximately 15.8, and the ratio since 1946 (the post-World War II period) is 17.3, so, it is fair to call a "normal" PE ratio about 16.5, which is relatively stable over the years. </em>

 2. You invest $100,000 in 40 stocks, 20 bonds, and a certificate of deposit (CD). What kind of risk will you primarily be exposed to?  

Th e correct option is <em>(b). Portfolio risk  is the chance that the combination of assets or units, within the investments that you own, fail to meet financial objectives. Each investment within a portfolio carries its own risk, with higher potential return typically meaning higher risk. It can be computed as  the risk of the  two-securities portfolio, first take the square of the weight of  40 Stocks ($100,000.00)  and multiply it by square of standard deviation of  the 40 stocks. Repeat the calculation for 20 Bonds and a Certificate of Deposit.</em>

<em></em>

3. Generally, investors would prefer to invest in assets that have:  

a. A higher-than-average expected rate of return given the perceived risk <em>Yes they will because a higher -than average expected rate of return will inform the investor the type of strategies to adopt to guarantee the expected earnings containing the risk. </em>

<em></em>

5 0
3 years ago
Georgie is taking a chemistry class, where different liquids must be combined in specific amounts in order to produce an end pro
deff fn [24]

Answer:  d.       formal operational

Choices given in the question are:

a.      Latency

b.       trust vs. mistrust

c.        concrete operational

d.       formal operational

Georgie exhibits the major characteristics of a formal operational stage of cognitive development as per Piaget. This stage is characterized by the individual able to think abstractly and understand the form or structures of a problem. Georgie understands that in the experiment,  he must combine specific amounts of each ingredient and not just pour in them to create the right mixture

8 0
3 years ago
Recall the components of internal control. identify the internal control weakness in this​ situation, and propose a way to corre
ale4655 [162]

Answer:

The internal control weakness includes:

1. The credit department receives incoming cash from the customers.

2. A credit department can pocket cash received from a customer and copies all remittance slips for the controller, then destroy the remittance slip.

3. The credit department can then write off customer's account as uncollectible, and the company will stop pursuing collection from the customers

Explanation:

To begin, it is important to understand the concept of Internal Control. Internal control can be generally understood as the procedures determined to ensure organization's objectives in efficiency and effectiveness, reliable financial reporting and compliance with existing organization's rules and regulations.

Hence, internal control is meant to strengthen the achievement of an organization's objectives. Thus, we have seen a number of weaknesses from the scenarios painted above. It must be stated that the weaknesses stem from the fact that the company receives incoming cash receipt from customers.

To avoid and prevent this, a company should have a cash go to a clocked box at the bank. With this, the weaknesses emanating from physical cash handling by the credit department will be eliminated.

Taking a critical look at the internal control procedures, it'll be observed that the policies adopted on cash receipt is one not generally in tune with best practices. Hence, to strengthen the control, a cash go to a clock box at the bank should be created to facilitate and encourage customers' deposits in the banks. Doing this will ensure the department rids of weaknesses emanating from this cash treatment, and point number 2 and 3 as stated above can be easily resolved.

6 0
3 years ago
Other questions:
  • Your roommate, Allison Albright, is a non-business major. When she discovered that you are taking a course in Organizational Beh
    15·1 answer
  • _____ is the balance between supply and demand.
    9·1 answer
  • Carter Industries has two divisions: the West Division and the East Division. Information relating to the divisions for the year
    15·1 answer
  • What is the growth that takes place in the uterus during pregnancy known as?
    13·1 answer
  • Torino Company has 2,800 shares of $50 par value, 6.5% cumulative and nonparticipating preferred stock and 28,000 shares of $10
    12·1 answer
  • Robert owns a $214,000 town house and still has an unpaid mortgage of $150,000. In addition to his mortgage, he has the followin
    10·1 answer
  • Example 31: S borrows 5,00,000 to buy a house. If he pays equal instalments for 20 years
    11·1 answer
  • Identify the change in the parent function that will produce the related function shown as a dash line. f(x)= √ x
    7·1 answer
  • How can you get your money back if you send a p2p payment to the wrong person?.
    12·1 answer
  • The united states maintained its military superiority with a defense budget larger than the next __________ biggest military pow
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!