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sp2606 [1]
3 years ago
5

To provide external shareholders with relevant, reliable, consistent, and comparable financial information, the accounting profe

ssion has adopted _____ to guide the practice of financial accounting.
Business
1 answer:
masha68 [24]3 years ago
6 0

Answer:

<u>Generally accepted accounting principles</u>

Explanation:

Generally accepted accounting principles abbreviated as GAAPs , refer to set of accounting rules and principles to ensure clarity, consistency of reported information and to enhance reliability and comparability of accounting information.

GAAPs were prescribed by Financial Accounting Standard Board (FASB) of the United States. The accountants of public companies in United States are supposed to abide by GAAP principles while compiling accounts and preparing financial statements.

Thus, GAAPs lay emphasis upon presenting financial information which is relevant to the shareholders, which is true and can be relied upon , which is consistent and which can be compared to deduce past trends and for forming opinions and arriving at conclusions.

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A company paid Jen Rogers, its sole stockholder, a total of $25,000 in dividends during the current year. The entry needed to cl
sergiy2304 [10]

Debit Income Summary and credit Dividends for $25,000.

Answer: Option 5.

<u>Explanation:</u>

The balancing account of the company or an organisation is where the entries of the company are made and recorded so that at then end of the year the financial position of the company becomes clear to the stake holders of the company.

It is a double entry book keeping record where single entry is made on two sides of the book, the debit side and the credit side. This makes the book in balance for every entry. Entry on the debit and the credit side is made with the same amount to maintain the balance.

7 0
3 years ago
You are a real estate owner in Bloomington Indiana and you have rented a house to students. You expect to make 6% per year on th
Lyrx [107]

Answer:

The present value of the contract is 0.5% higher if the rent is paid at the beginning of the month. That is equal to $11.28 for every $100 of rent.

Explanation:

if the rent is paid at the beginning of the month, the present value of the lease contract will be:

PV = monthly rent x PV annuity due factor

we are not given the monthly rent, but we know the PV annuity due factor for 0.5% and 24 periods = 22.67568

if the rent is paid at the end of the month, the PV = monthly rent x PV ordinary annuity factor

the PV ordinary annuity factor, 0.5%, 24 periods = 22.56287

assuming that the rent is $100 (just to calculate a %), the PV of an annuity due = $2,267.57

the PV of an ordinary annuity = $2,256.29

the difference between them = [($2,267.57 / $2,256.29) - 1] x 100 = 0.5%

7 0
3 years ago
Two online magazine companies reported the following in their financial statements: BetterWorth Outdoor Fun 2018 2017 2018 2017
Rudik [331]

Answer:

BetterWorth and Outdoor Fun ROE and P/E Ratio Analysis:

1-a) Computation of 2018 ROE for each company.

ROE = Return on Equity.  It is a percentage of the net income over equity.  It is best to use the average equity, if given two balance sheets.  See explanation for further clarification.

Average Equity = Two balance sheets' equity divided by 2.

BetterWorth's Average Equity = (597,186 + 522,814) / 2 = 560,000

Outdoor Fun's Average Equity = (457,151 + 477,049) / 2 = 467,100

BetterWorth's 2018 ROE = 111,000 / 560,000 x 100 = 19.82%

Outdoor Fun's 2018 ROE = 92,420 / 467,100 x 100 = 19.79%

1-b) BetterWorth's appears to be generating greater returns on stockholders' equity in 2018.  It generated 19.82% as against Outdoor Fun's 19.79%, especially with the use of average equity.

2-a) Computation of 2018 P/E Ratio for each company:

P/E Ratio = Price/Earnings Ratio.  It is expressed as the market price per share divided by earnings per share.

BetterWorth's 2018 P/E Ratio = 54.90 : 3.4 = 16.15 : 1

Outdoor Fun's 2018 P/E Ratio = 33.05 : 2.30 = 14.37 : 1

2-b) Investors appear to value BetterWorth more than Outdoor Fun.  This is because investors are ready to pay 16.15 times more for each unit of the earnings of BetterWorth.  For Outdoor Fun, investors are only willing to pay 14.37 times more for each unit of its earnings.

Explanation:

A) ROE = Return on Equity.  It is expressed as a percentage of net income over average equity.  In the above calculations, we used the average equity.  The reason is this: average equity smoothens the mismatch between the income statement and the balance sheet.

But, what does ROE measure?  It measures a company's management effectiveness in using assets to make profits for shareholders.

Had we used the 2018 equity, Outdoor Fun would have appeared to have performed relatively better than BetterWorth over ROE.

B) P/E ratio relates a company's share price to its earnings.  The P/E ratio shows that the company's stock is overvalued or undervalued.  It depicts investors' confidence or lack of it in the company's ability to produce more or less earnings.  Without earnings expectation, investors cannot price a company's stock highly.  It is therefore a stock valuation tool widely used by financial analysts and investors.

6 0
3 years ago
In a small, closed economy, national income (GDP) is $750.00 million for the current year. Individuals have spent $300.00 millio
andrew-mc [135]

Answer:

1. $50 million

2. $50 million

3. In a closed economy, national savings equals investment

Explanation:

For a closed economy, the formula for calculating GDP = C + I + G

Where C - Consumption

I - investment

G - Government Spending

To find investment ,

750 = 300 + I + 400

I = $ 50 million

National savings = private saving + Government saving

Private saving = Y − T − C

750 - 300 - 250 = $200 million

Public savings = T - G

250 - 400 = $-150 million

National savings = $200 - $ 150 million = $ 50 million

Nb - All numerical values are in $ millions

6 0
3 years ago
In May, one of the processing departments at Messerli Corporation had beginning work in process inventory of $18,000 and ending
Evgen [1.6K]

Answer:

$170,000

Explanation:

The computation of the total cost to be accounted is shown below:

= Beginning work in process units + cost of units transferred out

= $18,000 + $152,000

= $170,000

In order to compute the total cost to be accounted we simply added the beginning work in process units and the cost of units transferred out so that the exact value could come

6 0
3 years ago
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