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vagabundo [1.1K]
2 years ago
6

A traditional GAAP income statement does not help managers to predict the financial results of their decisions. Which of the fol

lowing is a reason for this shortcoming?
a. The GAAP statement is based on cost function rather than cost behavior.
b. The GAAP statement is based on classification rather than function.
c. The GAAP statement is based on cost behavior rather than cost function.
d. The GAAP statement is based on function rather than classification.
Business
1 answer:
Amiraneli [1.4K]2 years ago
7 0

Answer:

A) The GAAP statement is based on cost function rather than cost behavior.

Explanation:

Income statements that follow GAAP rules categorizes expenses based on their business function: product, selling or administrative.

While cost behavior categorizes costs based on how they influence a company's activities: variable, fixed and mixed. When a manager wants to measure the impact of any decision he/she makes, they need to use this type of categorization. For example, if fixed costs increase, what is the new break even point? If variable costs decrease, how is the marginal cost affected?

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Teri, Doug, and Brian are partners with capital balances of $20,000, $30,000, and $50,000, respectively. They share income and l
mixer [17]

Answer:

$20,000

Explanation:

For computing the Doug withdrawal amount, first, we have to compute the net income or net loss which is shown below:

Net income/loss = Revenue - expense

                           = $350,000 - $380,000

                            = -$30,000

Now Doug share in net loss = Net loss × (his share ÷ total share)

                                               =  - $30,000 × (2 ÷ 6)

                                               =  - $10,000

We knew that the Doug capital is $30,000 and his share in loss is $10,000

So, its withdrawal amount = $30,000 - $10,000 = $20,000

                   

7 0
3 years ago
For direct price discrimination to work a. ​The firm need not be able to identify the members of the low-value group b. ​The fir
MakcuM [25]

Answer:

The correct answer is letter "B": ​The firm be able to charge the low-value customers a lower price than the higher-value customers.

Explanation:

Price discrimination is the practice by which producers charge different prices to different consumers based on factors such as<em> age, income or location</em> to mention a few. This differentiation in prices is always justified by producers with one of those factors otherwise the approach would be considered illegal.

Direct price discrimination<em> is carried out when the firm charges lower prices to an unfavored sector of the market keeping the regular price in sectors where income is higher.</em>

6 0
3 years ago
On January 1, 2021, Laramie Inc. acquired land for $9.6 million. Laramie paid $2.9 in cash and signed a 6% note requiring the co
Alexxandr [17]

Answer:

$9.6 million

Explanation:

The amount Laramie would record in its books of account in respect of the land acquisition cost is the sum of the cash paid now and the notes payable .

That effectively gives acquisition cost of $9.6 million ($2.9 million+$6.7 million).

The interest payable on the notes payable of $6.7 million would be treated as expense in the income statement of years 2021 and 2022 respectively without being added to the acquisition cost since it is a revenue expense and should not be capitalized.

6 0
3 years ago
Indicate where each item should be presented in the statement of cash flows (indirect method) using these four major classificat
saw5 [17]

Answer:

a.  Payment of interest on notes payable - Operating Activity

b.  Exchange of land for patent - Non Cash investing activity

c.  Sale of building at book value - Investing Activity

d.  Payment of dividends - Financing Activity

e.  Depreciation - Operating Activity

f.   Receipt of interest on notes receivable - Operating Activity

g.  Issuance of Capital Stock - Financing Activity

h.  Amortization of patent - Operating Activity

i.   Issuance of bonds for land - Non Cash investing activity

j.   Purchase of land - Investing Activity

3 0
3 years ago
Which of the following is NOT considered to be one of the three primary functions that all organizations​ perform? A. research a
lidiya [134]

Answer: Research and development

Explanation: Primary functions are those functions which ensures that the essential requirements to operate the business efficiently are met. These require monitoring by the second level managers of the organisation.

Production, marketing and finance are the basic needs of an organisation for living in the market. Research and development is not an activity without which the business won't be able to run.

Thus, we can conclude that the right answer is Option A.

6 0
2 years ago
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