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sergey [27]
2 years ago
5

When short-term investments appear in the balance sheet at their current market values, it is an exception to the ______ princip

le?
Business
2 answers:
Elan Coil [88]2 years ago
8 0

Answer:

cost

Explanation:

It states that the assets and services are recorded at their purchase cost and that the accounting record of the asset should be maintained based on cost rather than the current market value.

The cost is the economic expense caused by the production of some good or the offer of some service. This concept includes the purchase of inputs, the payment of labor, production and administrative expenses, among other activities. According to the cost principle, the acquired assets and services must be recorded at their actual cost (also called historical cost). Although the buyer thinks that he obtained a bargain, the good is recorded with the price paid in the transaction, not at its “expected” cost. Assume that your sound equipment store acquires equipment from a vendor in liquidation. Consider also that the transaction is a bargain and pay just $ 2,000 for the equipment that would normally have cost you $ 3,000. The cost principle needs to record the actual cost of $ 2,000, not the $ 3,000 that the equipment is worth.

The cost principle also states that accounting records must contain the historical cost of an asset while the company has it. Why? Because cost is an objective measure. Imagine that the store maintains ownership of the equipment for six months. During that period, equipment prices rise, which can be sold at $ 3,5000. Should their book value (their "book value") be the actual cost of $ 2,000 or the current market value of $ 3,500? In accordance with the cost principle, the book value of the equipment remains its actual cost of $ 2,000.

Semenov [28]2 years ago
5 0
Cost Principle, 
<span>requires that assets be recorded at the cash amount (or its equivalent) at the time that an asset is acquired.</span>
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Saint Nick Enterprises has 17,500 shares of common stock outstanding at a price of $69 per share. The company has two bond issue
mihalych1998 [28]

Answer:

total weight of debt = 0.343 or 34.3%

Explanation:

stock's market value = 17,500 x $69 = $1,207,500

bond₁'s market value = $250,000 x 101.5% = $256,750

bond₂'s market value = $350,000 x 106.5% = $372,750

total market value of the firm = $1,837,000

weighted capital structure:

                                       market value            weight

stocks                             $1,207,500               0.657

bond₁                              $256,750                  0.140

bond₂                              $372,750                  0.203

total                                $1,837,000                 1

total weight of debt = 0.343 or 34.3%

8 0
2 years ago
Jamie is researching places to live after graduating college he asked you I keep coming across as phrase cost-of-living I’ve nev
Klio2033 [76]

Answer:

The cost of living refers to the prices of goods and services needed to sustain an average level standard of living in an area

Explanation:

The cost of living refers to the cost of keeping up with a given standard of living. It is the amount Jamie would need to keep up with basic expenses such as food, housing, clothing and medical care. Cost of living compares the expense between living in two different areas. Jamie's cost of living is tied to his wages and it can be measured using what is called purchasing power parity.

6 0
3 years ago
Cyberphone, a manufacturer of cell phone accessories, ended the current year with annual sales (at cost) of $72 million. During
viktelen [127]

Answer:

INCREASE IN AVERAGE INVENTORY VALUE REQUIRED = $2.25 million

Explanation:

Inventory turnover will be determined as :

Inventory turnover = Annual sales ( at cost ) / Inventory value

Annual sales this year = $72million

Inventory turnover = 8 times

Therefore , Inventory value of current year = $72/8 =$ 9 MILLION

If annual sales ( at cost ) increases by 25%, Inventory value also has to increase by 25% to maintain the same inventory turnover ratio next year

Therefore , increase in average inventory value required = 25% of $9 million = $2.25 million

INCREASE IN AVERAGE INVENTORY VALUE REQUIRED = $2.25 million

5 0
3 years ago
7. XYZ stock price and dividend history are as follows: An investor buys three shares of XYZ at the beginning of 2010, buys anot
Ainat [17]

Answer:

Arithmetic average is 3.15% and Geometric average is 2.33%.

Explanation:

5 0
2 years ago
A student deposits $1,642 in the bank that pays 6.2% interest yearly (using yearly compounding). After 5 years he withdraws the
tamaranim1 [39]

Answer:

the perpetuity will pay the student 166.36 dollar per years

Explanation:

First, we solve for the amount of the original investment after 5 years:

Principal \: (1+ r)^{time} = Amount

Principal 1,642.00

time 5.00

rate 0.06200

1642 \: (1+ 0.062)^{5} = Amount

Amount 2,218.17

<u>Then, this goes into a perpetual annuity at 7.5%</u>

2,218.17 x 0.075 = 166.3630983 = 166.36

the perpetuity will pay the student 166.36 dollar per years

6 0
3 years ago
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