All categories

3 years ago

The closing process is necessary in order to

Business

1 answer:

goldfiish [28.3K]3 years ago

5 0

Answer:

The closing process is necessary in order to confirm that net income or net loss and owner withdrawals for the period are closed into the owner's capital account.

Explanation:

Most economies around the world follow a specific accounting period which is commonly referred to as financial year or tax year. Before a new financial year begins, the accounts from the ongoing financial year have to be closed legitimately through a process called the 'closing process'. This process culminates in confirming that the net income secured or the net loss bore by the owner is included in no other account than the owner's capital account.

In order to carry out the closing process, the accountant has to commence with identifying the accounts that are required to be closed with or before the ending of the predefined financial period. He then has to record the last entries in these accounts as 'closing entries'. Once the accounts are closed, he has to calculate the trial balance and interpret the outcome. Closing of temporary accounts through a valid closing process dispenses the ease of calculating profit and loss in any given financial period coming to end.

You might be interested in

The demand for the services of trish's computer services has increased. trish employs several workers who diagnose and fix clien

MArishka [77]

Answer:

1) what will happen to the mrp and wages of trish's workers?

the marginal revenue product (MRP) is defined as the additional revenue generated by employing one extra unit of labor. In this case, the MRP will exceed the wages paid by Trish, generating economic rent or above average returns.

2) the wage rate is w2; the old wage was w1. what is the economic rent trish's workers now earn?

If Trish raises her employees' wages due to the increasing in price, then her employees will be earning economic rent = w2 - w1. This means that their wage is higher than the usual wage that would be paid for doing that job.

3) define economic rent.

Economic rent is defined as the additional profit generated by a business that exceeds its opportunity cost.

Economic rent = marginal revenue product – opportunity cost

The opportunity cost is the extra costs or benefits lost from choosing one activity or investment over another alternative.

In this case, Trish is earning an economic rent with her business because her earnings are higher than any other earnings that she could make by investing in something else.

4) what factors affect the elasticity of supply of the labor supply curve that trish faces as she hires workers?

The elasticity of the labor supply curve shows how much a 1% change in wages affect the quantity of labor supply (in % also).

In this case, the factors affecting the labor supply would be the substitution effect and the income effect of a rise in wages. Both factors are opposite, and in this case I would believe that the substitution effect would be greater.

The substitution effect means that workers will start working more because they are paid a higher wage. they will be willing to give up leisure time in order to work more hours and earn a higher salary.
The income effect means that workers will start working less hours due to higher wages per hour.

8 0

3 years ago

8.5 Chrysler LLC Chrysler LLC, the now privately held company sold-off by Daimler-Chrysler, must pay floating rate interest thre

murzikaleks [220]

Answer: -0.93%

Explanation:

In 3 months time Chrysler will have to pay a yield of 6.93% when in fact 3 months from now, had they not bought the futures, they would have to pay 6%.

This means that they will have overpayed with the futures contract.

The amount in interest they overpayed by can simply be calculated as,

= Floating Rate 3 months from.now - Effective yield on Futures contract

= 6% - 6.93%

= -0.93%

Chrysler made a loss of (0.93% )

4 0

4 years ago

You just won the grand prize in a national writing contest! As your prize, you will receive $1,000 a month for 15 years. If you

skelet666 [1.2K]

Answer:

The prize is worth $111,258.73.

Explanation:

Giving the following information:

Cf= $1,000 a month

Interest rate= 0.07/12= 0.005833

Number of months= 15*12= 180

First, we need to calculate the final value:

FV= {A*[(1+i)^n-1]}/i

A= cash flow

FV= {1,000*[(1.005833^180) - 1]} / 0.005833

FV= $316,951.28

Now, the present value:

PV= FV/(1+i)^n

PV= 316,951.28/(1.005833^180)

PV= $111,258.73

6 0

3 years ago

You plan on making a $235.15 monthly deposit into an account that pays 3.2% interest, compounded monthly, for 20 years. At the e

crimeas [40]

Answer:

Ans. a) $769.27 is the amount of money that you can withdraw every month for 120 months at a rate of 3.2% compounded monthly if you deposit $235.15 every month, for 20 years.

Explanation:

Hi, first we have to turn this compounded rate into an effective rate, in this case, effective monthly, that is by doing the following.

$r(monthly)=\frac{0.032}{12} =0,00267$

that is 0.267% effective monthly.

Now, we need to take all this annuities to 20 years in the future, which is going to be the present value to use in order to find the amount of moneuy that you can withdraw every month, for 120 months (10 years).

$FutureValue=\frac{A((1+r)^{n} -1)}{r}$

For A = 235.15; r =0,00267; n=240

$FutureValue=\frac{235.15((1+0.00267)^{240} -1)}{0.00267}=78,910.41$

Now, in order to find the amount of money to withdraw for 10 years, every month, we have to use the following equation.

$PresentValue=\frac{A((1+r)^{n}-1) }{r(1+r)^{n} }$

Since the future value 20 years from now is the present value of the annuity we are looking for, all should look like this.

$78,910.41=\frac{A((1+0.00267)^{120}-1) }{0.00267(1+0.00267)^{120} }$

$78,910.41=A(102.5781087)$

$A=\frac{78,910.41}{102.5781087} =769.27$

So the answer is a) $769.27

Best of luck.

8 0

3 years ago

Georgia Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative

Alexxandr [17]

Answer:

($3,000)

An outflow

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

In cash flow statements, an increase in assets(other than cash) is treated as a cash outflow while a decrease is considered as an inflow of cash.

Hence if accounts receivables balance increases from $45,000 i 2018 to $48,000 in 2019, the change of $3,000 will be shown as an outflow.

6 0

3 years ago