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vagabundo [1.1K]
3 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]3 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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Checkout counters are an example of this operating expense
snow_tiger [21]

Answer: Fixtures

Explanation:

Fixtures are a type of fixed assets that are so named because they are fixed to the property they are in, in such a way that it would require substantial work to remove them.

Checkout counters are fixed to the ground in grocery stores and other places that use them and trying to remove a checkout counters takes a lot of effort so they qualify to fall under fixtures.

6 0
3 years ago
A dentist decides to offer teeth whitening services to a target market. The dentist's marketers have to consider which character
andrew11 [14]

Answer:

D) intangibility

Explanation:

in this case, the whitening service offered by the dentist has an intangible characteristic since there is no tangible product or service that their potential customers can see, touch, taste, hear or smell. The service offered is something that the potential customers must imagine, i.e. they have to imagine how they would look like if their teeth were whiter.

6 0
3 years ago
Huey has eaten two hamburgers and is considering a third.The marginal benefit in his decision is the pleasure from consuming
krok68 [10]

Answer:

C

Explanation:

A rational consumer would keep consuming as long as he continues to derive satisfaction from consuming one more unit of a product..

For example, if you have eaten two hamburgers and you are contemplating whether to consume one more unit of hamburger or not.  one of the factors you would consider is if you would derive a marginal benefit from one more consumption. If you would, you would consume one more hamburger and if you would not, you won't consume the hamburger

6 0
4 years ago
Proponents of using the inflation tax to finance government budget deficits argue that: Multiple Choice these deficits would be
antoniya [11.8K]

Answer:

while inflation is undesirable, the breakdown of the economy that would occur in the absence of an inflation tax would be worse.

Explanation:

This is because, they believe that, when the economy under inflation is taxed, the money generated would be used to cushion the effects of those inflation through adequate management and administering of policies and projects.

4 0
3 years ago
Consider a firm with a 9.5% growth rate of dividends expected in the future. The current year’s dividend was $1.32. What is the
Over [174]

Answer:

Using the DDM method we can find the fair value of the stock. For that we need the current years dividend, the company's growth rate and the required rate of return on the stock.

The formula for DDM is

Value = D*(1+G)/R-G

D= 1.32

G= 9.5%

R=13%

1.32*(1+0.095)/(0.13-0.095)= 41.29

The fair present value of the company based on the dividend discount model is $41.29.

Explanation:

6 0
4 years ago
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