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Allisa [31]
3 years ago
7

In 2007, Wagner Associates appropriated $65,000 of retained earnings to satisfy the restrictive covenant of a loan agreement. Wh

at are the financial statements effects of the appropriation
Business
2 answers:
Dmitry [639]3 years ago
8 0

Answer:

The financial statements effects of the appropriation are as follows:

a) Retained Earnings will reduce by $65,000 in the Income Statement and the Balance Sheet.

b) Cash balance will also reduce by $65,000 in the Balance Sheet.

Explanation:

Normally, partnerships can distribute or appropriate their profits according to their partnership agreements.  However, there may be restrictive loan covenants that can specify how much profits partnerships can distribute among the partners.  The purpose of such covenants is to ensure that the ability of the partnership to repay loans are not compromised through profit appropriations.

Financial institutions, therefore, to secure the loans advanced to businesses may include restrictive covenants.  Some restrictive covenants may specify the minimum cash balance to maintain.  Restrictive covenants, generally, remain measures to overcome unwanted business outcomes.  It is a form of insurance against loan repayments.

Harrizon [31]3 years ago
6 0

Answer:

Reduction of $65,000 retained earnings and cash balance in the balance sheet

Explanation:

The financial statement effect of the appropriation is that

retained earnings and cash balance will reduce by $65,000 in the balance Sheet.

There are two entries on the balance sheet of a firm

(1) retained earnings and (2) cash equivalent.

1) Retained earnings refers to the running total of a firm's profits and losses. Retained earnings is basically the reinvestment of profit back into the business.

A firm can make two types of decision regarding Profit (1) return to firm's shareholders as dividend or (2) reinvent the profit into the firm.

The reinvested Profit is referred to as "retained earnings".

2) Cash equivalent refers to short-term investment that can be converted into cash within a short period of time.

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(A)The theory applied by the manger is refereed to as the Vroom's expectancy. it was made to inspire Laura to perform better in her place of  work, for this she was promoted duw to her performance and zeal to work.

(B) The motivational factors of Herzberg and Maslow's esteem and self actualization are very close.

Maslow's esteem and actualization focused on employee motivation towards work. while Herzberg motivational factor where more of recognition, achievement, prestige and status.

Explanation:

Solution

(A) The theory used by manager is called the Vroom’s expectancy m which was used to inspire Laura.

Laura put in a great amount of work towards  developing her sales relationship which showed in desired output.

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(B) The factors of Herzberg's motivation and Maslow's self-actualization and respect needs are considered very close.

The motivating factors initiated by Herzberg are job elements as responsibility, recognition, achievement, and growth. this was all centered on employee motivation and satisfaction

With regard to Maslow’s respect and self-actualization needs which focused on motivating employee into work. esteem needs centered on status, prestige,and recognition. Self-actualization is called an achievement that us supreme where a person or individual  creates an impact that is seen as positive or beneficial to the society.

5 0
3 years ago
Which of the following balance sheet equations is​ INCORRECT? A. Assets minus Current liabilities​ = Longminusterm liabilities​
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Answer:

C

Explanation:

This balance sheet equation is incorrect, Assets minus Current liabilities​ = Longminusterm liabilities

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Stockholders of a company may be reluctant to finance expansion through issuing more equity because leveraging with debt is alwa
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Answer:

Their earnings per share may decrease.

Explanation:

Shareholders of a company may be reluctant to finance expansion through issuing more equity because Their earnings per share may decrease and at the same time debt is always better option to finance.

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Answer:

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