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Leokris [45]
3 years ago
8

A conservative investor has a portfolio that consists of diversified investments in equity securities, debt securities, and mone

y market instruments. The investor is mildly concerned about a downturn in the stock market. If this investor were seeking to further diversify, which of the following would be the BEST recommendation?
[A] A Balanced Fund
[B] Real Estate-Related Investments
[C] A Hedge Fund
[D] Speculation in Equity Options
Business
1 answer:
satela [25.4K]3 years ago
4 0

Answer:

Real Estate-Related Investments.

Explanation:

Real estate related investments involves the purchase, management, renting and sale of real estate properties with the aim of making profit.

Real estate investment is capital intensive and has low liquidity compared to other forms of investment.

This will be a good option for the conservative investor because real estate investment is stable and not prone to huge losses that can be incurred in the money markets. Also real estate is not affected by equities market. So will be a safety net in case of failure in the equity market.

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Determining Financial Statement Effects of Write-Offs and Bad Debt Expense Using the Allowance Method
uysha [10]

Answer: Please see the analysis below

Explanation: The following are the financial statement effects

                                  Assets Liabilities Stockholders Equity Income Expense

Write-off of $10,000     -           -                   Nil                           Nil         Nil

Bad debt of $8,000     -           +                   -                                -             +

  • Write-off of customer balances of $10,000 would lead to reduction in assets and also reduction in liabilities (since the provision for doubtful accounts reports to liabilities but mapped to the accounts receivable to show the net amount). Here, we have assumed that there is an existing allowance for doubtful accounts that has $10,000 buffer or more. If the write-off was not initially provided for, it would hit expense by debiting bad debt expense and crediting the accounts receivable. <em>Its effects are therefore decrease in asset, decrease in liabilities.</em>
  • Bad debt expense of $8,000 affects the expense and the liabilities/assets. Journal entries to record the bad debt expense is Debit Bad debt expense $8,000; Credit Allowance for doubtful accounts $8,000. So, it affects the expense, liabilities and ultimately the assets (allowance for doubtful accounts is a contra to the accounts receivable). <em>Its effects are increase in expense, increase in liabilities, decrease in stockholders equity, decrease in income and decrease in assets</em>
4 0
3 years ago
Read 2 more answers
Match each item (characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards) w
Ira Lisetskai [31]

Answer:

The answers are,

Items not easily quantified in dollar terms are not reported in the financial statements.

Monetary Unit Assumption

Accounting information must be complete, neutral, and free from error.

Faithful representation

Personal transactions are not mixed with the company's transactions.

Entity Assumption

The cost to provide information should be weighed against the benefit that users will gain from having the information available.

Cost constraint

A company's use of the same accounting principles from year to year.

Consistency

Assets are recorded and reported at original purchase price.

Historical Cost

Accounting information should help users predict future events, and should confirm or correct prior expectations.

Relevance

The life of a business can be divided into artificial segments of time.

Periodicity assumption

The reporting of all information that would make a difference to financial statement users.

Full Disclosure principle

The judgment concerning whether an item's size makes it likely to influence a decision-maker.

Materiality

10. Assumes a business will remain in operation for the foreseeable future.

Going concern

12. Different companies use the same accounting principles

Comparability

Explanation:

7 0
3 years ago
On January 1, Year 1, Frost Co. entered into a 2-year lease agreement with Ananz Co. to lease a new computer. The lease term beg
satela [25.4K]

Answer:

Frost (Lessee) and Ananz (Lessor)

The circumstance that would require Frost to classify and account for the arrangement as a finance lease is:

c. The economic life of the computers is three years.

Explanation:

a) Data:

Annual lease payments = $8,000

Present value of the minimum lease payments = $13,000

Fair value of the computer = $14,000

The economic life of the computers = 3 years

The lease period = 2 years

b) One of the conditions for classifying the lease arrangement as a finance lease is that the lease term of 2 years forms a significant part of the asset's useful life of 3 years.  Other conditions include:

Firstly, ownership of the asset is transferred to the lessee at the end of the lease term.  The second condition is that the lessee can purchase the asset below its fair value.

5 0
3 years ago
Which of the following is not a correct statement about​ M2? A. M2 is a broader definition of money compared to M1 and currency.
natka813 [3]

Answer:

D) M2 is the best definition of money as a medium of exchange.

Explanation:

M2 includes all M1 plus some broader types of money which represent near money such as savings accounts, money market securities, mutual funds, small denomination time deposits (CDs worth less than $100,000). These are classified as ear money because they can be easily and quickly converted into currency (cash) or checking account deposits.

8 0
3 years ago
When merging REA diagrams from two different cycles, it is not necessary to change the minimum cardinality for _____ that appear
elixir [45]

Answer:

c. Events

Explanation:

REA is the acronym for Resource, event, agent. It is a model employed by the Accounting Information System (AIS). REA comprises three (3) categories of elements.

  • Resource ( inventory, cash)
  • Event (sale, purchase)
  • Agent (customer, employees)

REA a technique used for documentation, and it represents a portion of an entity-relationship diagram.

During the different evaluation of business cycles, the minimum cardinalities of the event are usually the same. It is not altered, i.e., they remain 0 despite each business cycle component when REA diagrams are fused.

3 0
3 years ago
Read 2 more answers
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