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nevsk [136]
3 years ago
15

Berkshire Inc. uses a periodic inventory system. At the end of 2017, it missed counting some inventory items, resulting in an in

ventory understatement by $670,000. Assume that Berkshire has a 35% income tax rate and that this was the only error it made. If undetected, what is the effect of this error on Berkshire's December 31,2017 balance sheet?
a. Assets understated by $670,000 and shareholders' equity understated by $670,000.
b. Assets understated by $435,500 and shareholders' equity understated by $435,500.
c. None of these answer choices are correct
d. Assets understated by $670.000, liabilities understated by $234,500 and shareholders' equity understated by $435,500
Business
1 answer:
ziro4ka [17]3 years ago
8 0

Answer:

d. Assets understated by $670.000, liabilities understated by $234,500 and shareholders' equity understated by $435,500

Explanation:

Assets in Inventory will be understated by $670.000, this will also understate the tax payable to authorities by $234,500 because profits will be understated and equity will be understated by $435,500.

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Say the marginal tax rate is 20 percent and that government expenditures do not also that the economy is at potential output and
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<u>Solution and Explanation:</u>

a) The deficit is structural deficit, not cyclical deficit

b) Structural deficit is $450 billion

Revenue less than outlays; the GDP = Potential GDP

cyclical - during a recession , Structural - normal times

This is the budget deficit at potential GDP

Structural deficit = Total Government deficit - Cyclical Deficit

Government expenditures do not change with output

c) the deficit is both structural and cyclical

200 billion below potential; at potential output it will be 200 billion higher

Cyclical deficit = $200 billion

Structural = 450 - 200 = 250

d) Cyclical surplus = $350 billion

Structural deficit = $100 billion

e) Structural as normal stabilization policies will not remove a structural deficit

5 0
3 years ago
HELP ASAP PLS!!! Complete the following sentence.
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5 0
3 years ago
An NOL has the potential to lower income and reduce taxes for the taxpayer
iren2701 [21]

Answer:

The correct response is "for the carryover or carryforward year".

Explanation:

  • NOL usually happens that whenever a taxpayer's corporate taxable income exceeds his corporation yearly revenue. The whole NOL could be utilized to back split from several other taxable incomes, which have become perhaps throughout the future, in other words, managed to carry forward.
  • Throughout the current environment, and there'll be revenue, NOL would be adapted and the tax burden would be whittled down either by NOL proportion.
3 0
3 years ago
A firm has a profit margin of 5.1 percent, a total asset turnover of 1.84, and a return on equity of 16.2 percent. What is the d
Jet001 [13]

Answer:

Debt / Equity = 0.72649 : 1 or 72.649%

Explanation:

The ROE or return on equity can be calculated using the Du Pont equation. It breaks the ROE into three components. The formula for ROE under Du Pont is,

ROE = Net Income / Sales * Sales / Total Assets * Total Assets / Shareholder's equity

or

ROE = Net Income / Total equity

Assuming that sales is $100.

Net Income = 100 * 0.051 = 5.1

Total Assets = 100 / 1.84

Total Assets = 54.35

0.162 = 5.1 / Total equity

Total Equity = 5.1 / 0.162

Total Equity = 31.48

We know that Assets = Debt + Equity

So,

54.35 = Debt + 31.48

Debt = 54.35 - 31.48

Debt = 22.87

Debt / Equity = 22.87 / 31.48

Debt / Equity = 0.72649 : 1 or 72.649%

6 0
3 years ago
Investors are willing to purchase stocks having high P/E ratios because:
skelet666 [1.2K]

Answer:

D. They expect these shares to have greater growth opportunities.

Explanation: P/E(price to earning) ratio is a ratio used in the stocks and other marketable securities to determine the price of the shares of a particular Company in relationship with the annual net income of the company per share.

A HIGHER PRICE TO EARNING RATIO INDICATES THAT THE COMPANY INVOLVED IS EFFICIENTLY UTILIZING ITS RESOURCES IN ORDER TO GENERATE PROFIT,IT ALSO SHOWS THAT THEIR IS HIGH DEMAND FOR THE COMPANY'S SHARES BECAUSE INVESTORS TRUST IN THE COMPANY'S ABILITY TO GROW AND MAKE PROFIT.

4 0
3 years ago
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