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umka21 [38]
3 years ago
7

Indirect costs occur when

Business
1 answer:
nikklg [1K]3 years ago
5 0

Answer:

The answer is A. resources are shared by more than one product or service.

Explanation:

Indirect cost are costs that are not directly related or traced to any product or activity. They are shared or used by more than one activities. Examples include, Adminstrative expenses, advertising expenses, telephone expenses, rent, office expenses etc.

Like direct cost, indirect cost can be fixed or variable.

Indirect costs are used by business as a whole and not just limited to a particular product.

Option B is not correct. Cost that are directly traced or related to a product is known as direct material. For example, direct labour and direct material used to produce a particular good.

Option C and D are also wrong

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Explanation:

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J. S. Bach's organ chorale prelude "Jesu, Joy of Man's Desiring" is an example of ______ texture.
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The descriptions to cases that will possibility be addressed by a Trial Balance are:

  • can detect the accuracy of the accounting process(possible)
  • can help check whether the debit side is equal to the credit side(possible)
  • can help prepare the income statement(possible)
  • helps serve as a proof of the application of the double-entry system(not possible)
  • can help check whether a particular transaction has been completely omitted(not possible)

<h3>What is trial balance?</h3>

A trial balance can be regarded as  bookkeeping worksheet which contains the ledger that is arranged into  debit and credit account column .

Therefore, with trial balance, one can check whether the debit side is equal to the credit side.

learn more about trial balance at:brainly.com/question/24217989

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3 0
2 years ago
Black Sparrow Aviation, Inc. is concerned they are not maintaining adequate liquidity. The accounting department has provided yo
viktelen [127]

Answer:

Black Sparrow Aviation, Inc.

1. Indications from ratios about Black Sparrow Aviation:

The current ratio of 4.5 is higher than the industry's norm of 4.0.  This indicates that working capital elements are not being managed properly.  This is supported by the the remaining four ratios.  Inventory level is not optimal.  More inventory is held without being sold to customers.  Obviously, from the inventory turnover of 6.0 translating to approximately 61 days that it takes the company to sell its inventory as against the industry average of 35 days, it shows that the marketing and sales forces lack stamina.  Debt collection from customers is over-delayed, showing poor credit policy and management.  Perhaps, it takes the company many days to issue invoices.  More time than necessary is allowed to customers to pay compared to the industry norm.  In addition, payments are made to suppliers 11 days earlier than the industry average.  Advantage is not being taken of trade credit offered by suppliers.   Trade credit is an important source of funding operations, which every company should utilize to the maximum.

2A.  Based on the above ratios, I would recommend:

1. Minimum inventory should be maintained.

2. Sales efforts should be intensified, so that more sales are made each year than it is currently the case.

3. Debt collection is an important activity for every company that sells on account.  This activity should be taken seriously.  Credit extension to customers should not exceed 50 days.

4. Payments to suppliers can be delayed by more 10 days without offending suppliers.

2B. Results from Recommendations:

1. Working capital is not tied in inventory.

2. More debts are recovered from customers and on time.  Delay increases credit default.

3. More sales are made to customers, increasing the turnover.  The profit is always in the frequency of turnover.

4. Short-term financing is obtained from suppliers, which strengthens liquidity.

Explanation:

Liquidity management is a financial management tool, which describes a company's ability to meet financial obligations through cash flow, funding activities, and capital management in order to minimize the risks associated with illiquidity.

Calculation, analysis, comparison of ratios are some of the ways to make informed decisions on liquidity management.  Ratios should be compared over many periods, with best performing competitors, and the industry norm to ascertain the position of the reporting entity.

8 0
3 years ago
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