Answer:
The correct answer is false.
Explanation:
A firm incurs both variable cost and fixed cost in the short run. If the firm is able to cover the variable cost in the short run it will continue operating. However, if it is not able to cover its variable cost it will stop operating.
So, if the demand falls such that total revenue is not able to cover total cost but the variable cost is being covered, the firm will not stop production.
In the long run, all the costs are variable. So when the revenue is not able to cover cost, the firms will stop operating.
<em>Here's the remaining part of the question</em><em>:</em>
<em>Please analyze and place each item in the appropriate financial statement to which it belongs;</em>
<em> Revenues, Long-term liabilities, Owner's equity, Insurance expense, Land, Patents, Costs of Goods Sold, Income tax, Advertising expense, Insurance expense, Net change in cash, Accounts Receivable</em>
<u>Explanation</u>:
1. Balance Sheet: Note that this financial statement usually shows the asset and liabilities of the firm's account for a particular period of time. These items are found:
- Owner's equity,
- Patents,
- Long-term liabilities
- Accounts Receivable
- Land
2. Income Statement: this financial statement is primarily focused on the revenues and expenses expenses of the firm. Items found includes;
- Revenue,
- Costs of Goods Sold,
- Advertising expense,
- Income tax,
3. Statement of cash flow
Answer:
The annuity will cost him $963,212.95.-
Explanation:
Giving the following information:
Cash flow= $75,000
Interest rate= 0.0525
n= 20
First, we need to calculate the final value. We will use the following formula:
FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}
A= annual cash flow
FV= {75,000*[(1.0525^20) - 1]/0.0525} + {[75,000*(1.0525^20)] - 75,000}
FV= 2,546,491.88 + 133,690.82= $2,680,182.70
Now, the present value:
PV= FV/(1+i)^n
PV= 2,680,182.70/(1.0525^20)
PV= $963,212.95
Solution :
1.
The income from renting his showroom that Paolo would receive if he allowed to rent his showroom is a Implicit cost as this is a cost which will not be paid in actual.
The wages as well as the utility bills paid by Paolo is an example of explicit cost as this cost would be paid in actual for the businesses and are added in accounting.
The wholesale amount that Paolo pays for the pianos to the manufacturer is an explicit cost and is aid in actual to the manufacturer.
The salary that Paolo could have earned if he choses to be an accountant will be an implicit cost as this cost is not paid in actual.
2. Paolo's accounting profit can be calculated by :
Accounting profit = revenue - explicit cost
= 851,000 - 476,000 - 281,000
= $ 94,000
3. Paolo's economic profit is :
Economic profit = accounting profit - implicit profit
= 94,000 - 34,000 - 71,000
= -11,000
Answer and Explanation:
a. Organizational structure = Control environment
Top management always keep organizational structure Therefore, it is a part of the environment of control.
b. Report of company's conformity with environmental laws and regulations = Information and communication
Company's compliance reports are confidential accounting information.
c. Proofs and security measures = Control procedures
Proofing and monitoring controls ensure company is achieving its target.
