TOPIC FIVE (TEST - Vocabulary)

The survival principle states that A. the only firms that survive are those that maximize profits. B. firms must undertake socia

Flauer [41]

Answer:

The survival principle states that

A. the only firms that survive are those that maximize profits.

Explanation:

Profit maximization is important for a firm to survive. Without profit maximization, firms fail. Profits impact share price, business growth, and short-term and long-term survival. Profits reduce debt burden, and increase capital investments and acquisitions. Without profits, a firm cannot pay dividends or repurchase shares. Profit is at the center of a firm's survival. Even Baumol's theory of sales maximization states that it is only when an acceptable level of profit has been achieved that a firm can shift its focus away from profits to revenue maximization. This emphasizes the importance of profit maximization. Profit maximization also contributes to the maximization of cash flows.

5 0

3 years ago

If manufacturing overhead has been underallocated during the period, then which of the following is true?(a) the jobs produced d

Alecsey [184]

Answer:

The correct answer is B: the jobs produced during the period have been under-costed

Explanation:

Giving the following information:

If manufacturing overhead has been under-allocated during the period, then which of the following is true?

(a) the jobs produced during the period have been over-costed

(b) the jobs produced during the period have been under-costed

(c) the jobs produced during the period have been costed correctly

(d) none of the above

When manufacturing overhead has been under-allocated means that the actual costs incurred where superior that the estimated cost for the period.

7 0

3 years ago

Laurel Company factors $300,000 of receivables to Hardy Factors. Hardy assesses a 3% fee on the amount of receivables sold. Laur

Anika [276]

Answer:

Cash 291000 Dr

Factoring fees expense 9000 Dr

Accounts Receivables 300000 Cr

Explanation:

The factoring charge or fess is an expense for Laurel Company for the service provided by Hardy factors. So, whenever factoring is done, the ffactoring fees expense account will be debited as expense will increase. Th cash received is 300000 * 0.97 = 291000

The factoring fees is 300000*0.03 = 9000

As a result all of the accounts receivables will be credited from the books.

8 0

3 years ago

Hubert lives in San Francisco and runs a business that sells boats. In an average year, he receives $842,000 from selling boats.

aev [14]

Answer:

Explicit costs are normal costs of operating a business.

Implicit costs are opportunity costs meaning that they are the benefits foregone by engaging in a certain course of action.

The wholesale cost for the pianos that Hubert pays the manufacturer ⇒ EXPLICIT COST.

The salary Hubert could earn if he worked as an accountant ⇒ IMPLICIT COST.

The wages and utility bills that Hubert pays ⇒ EXPLICIT COST

The rental income Hubert could receive if he chose to rent out his showroom. ⇒ IMPLICIT COSTS

Accounting Profit = Revenue - Explicit costs

= 842,000 - 452,000 - 301,000

= $89,000

Economic Profit = Revenue - Explicit costs - Implicit costs

= 842,000 - 452,000 - 301,000 - 38,000 - 48,000

= $3,000

If Hubert's goal is to maximize his economic profit, he should stay in the piano business because the economic profit he would earn as an accountant would be -$3,000.

Economic profit as accountant = Salary + rental income - accounting profit from piano

= 48,000 + 38,000 - 89,000

= -$3,000

6 0

3 years ago

Each of the scenarios considers a change in the aggregate price level. Please indicate whether the scenario demonstrates the wea

const2013 [10]

Answer:

1. Wealth Effect as the increase in the price level lead to fall in the purchasing power of money.

2. Interest rate effect . A higher price level induces an increase in the interest rate which results in reduction of borrowing for consumption and investment expenditures.

3. Interest rate effect

4. Wealth Effect- With the decrease in the price level, the purchasing power of the money will rise. Thus, he will be able to purchase same amount at less expenditure and also save the residual amount.

8 0

4 years ago