Answer:
a.
Explanation:
‘Cash Flow Statement’ is one of major financial statement that indicates the inflow and outflow of cash along with the reasons by categorizing each cash transaction in three activities i.e., operating, investing or financing activity. Non-cash transactions are not considered while preparing a cash flow statement.
Operating Activities records the cash transactions involved in the operations of the business are recorded under ‘operating activities’ in the cash flow statement.
Examples: Revenue earned, expenses incurred etc.
There are two methods to prepare the cash flow statement. The only difference between both the methods is the way of presenting cash flow from operating activities.
The two methods of presenting cash flow statement are:
- Direct method: Operating activities section under direct method reports the amount of cash received and paid by the company during the period.
- Indirect method: Operating activities section under indirect method reports the net income and later adjusts the transactions to convert it to cash basis of accounting.
Answer:
Stocks and Bonds
Yes. It is a rational behavior for individuals with a long-term investment horizon to choose to invest in bonds rather than investing in stocks despite the overwhelming "evidence that suggests that over long periods of time stocks still outperform bonds."
Rational behavior involves making rational choices that provide optimal levels of benefit or utility for the individual. People who make rational choices would rather choose bonds with lower risks and returns than stocks with higher risks and returns.
Explanation:
Every rational investor would prefer to reduce her risk exposure instead of increasing it. Every investor is also aware that investments with higher risks attract higher returns. However, determining the certainty of the returns is difficult.
Answer:
Division A
If Division A agrees to sell the parts to Division B at $18 per unit, the company as a whole will be:
worse off by $30,000 each period.
Explanation:
a) Data and Calculations:
Production capacity of Division A = 34,000
Selling price per unit to outside customers = $21
Variable cost per unit = $13
Total fixed costs = $105,800
Order from Division B = 10,000
Price that Division B purchases from outside supplier = $18
Selling to Division B instead of selling to outside customers will result in a loss of $3 ($21 - $18) per unit
The total loss = $30,000 ($3 * 10,000)
Answer:
a. Overstates Year 1 cost of goods sold.
b. Understates Year 1 net income
c. Understates Year 2 cost of goods sold
Explanation:
a. The formula for Calculating the Cost of Goods sold is;
<em>Cost of Goods Sold = Opening inventory + Purchases - Closing inventory.</em>
If the closing inventory is understated, it will reduced the amount being subtracted from Purchases and Opening inventory which would means that Cost of Goods sold will be overstated.
b. The Cost of goods sold is deducted from sales to give Gross profit. If Cost of goods is overstated, it will reduce Gross Profit higher than it should. A lower Gross Profit equates to a lower Net Income.
c. Going by the formula in <em>a;</em>
<em>Cost of Goods Sold = Opening inventory + Purchases - Closing inventory.</em>
In Year 2, the understated Year 1 closing stock will become the understated Year 2 Opening stock. With the opening stock understated, the Cost of goods will be understated as well because Opening stock is meant to increase Cost of goods sold as the formula shows. If it is understated, the amount that it will add will be understated as well.
I believe the answer is: D. bond prices
Bond prices is determined by the mutual agreement between the company who issue the bond and the investors who bought them along with its value in the market. federal Open Market Committee only has the jurisdiction in United States Treasury securities and banking operation.
