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erma4kov [3.2K]
2 years ago
8

In times of rising prices, inventory profits (or phantom profits) are said to occur under the FIFO cost flow assumption. This oc

curs because under FIFO, the release of older, lower costs to the income statement results in higher profits than if current costs were to be recognized. This creates a problem for the reporting company because:?
Business
1 answer:
mart [117]2 years ago
4 0

Answer:

The answer is overstate profits

Explanation:

FIFO is First in First out. It assumrs that the oldest goods purchased or manufactured are sold first and the newest goods purchased or manufactured remain in ending inventory. With this, the cost of sales shows the cost of sales shows the cost of goods in the beginning inventory and the value of ending inventory reflects the cost of goods purchased more recently.

Therefore, in the period of rising inventory ending inventory are higher, cost of sales are lower and this makes profit to be higher or being overstated

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Ari, Inc. is working on its cash budget for December. The budgeted beginning cash balance is $23,000. Budgeted cash receipts tot
xenn [34]

Answer:

The business will need to borrow $34,000

Explanation:

We will need to analyse the cash flows the business has in order to determine how much needs to be borrowed to meet the ending cash balance desired.

The opening cash balance is $23,000, cash inflow as receipts is $136,000

So total cash on hand will be 23,000+ 136,000= $159,000

The cash on hand less disbursements will give ending balance

Ending balance = 159,000 - 135,000

Ending balance= $24,000

Desired closing balance is $58,000

Balance to meet desired cash= 58,000 - 24,000

Balance to meet desired cash= $34,000

4 0
3 years ago
Fred Hash worked for Van Stavern Construction Co. as a field supervisor in charge of constructing a new plant facility. Hash ent
Eduardwww [97]

Answer:

<em>Ratification by Principal One of the criteria for enactment is that all material truths involved in the transaction must be known to the Principal. Van Stavern was not aware of Hash's behaviour. </em>

He did not realize that somehow the steel is being shipped under his name, and that the shipments were being billed him directly. Unlike liability through obvious authority, approval by the principal is a positive act by which he or she acknowledges the agent's illegal actions.

Just a principal would ratify; thus, Van Stavern was not directly imputed to information by the invoices and checks signed by Van Stavern's workers.

The court stated that the use of corporate checks was further proof that Van Stavern regarded the expenditures as business, not private. So Van Stavern could not be held personally liable.

Remember that on Sutton Steel that's not excessively harsh. Sutton understood it was working with a building company and did not seek to get the personal approval of the contract from Van Stavern.

<em>Lawfully, Sutton's agreement in this case is called an unaccepted offer which can be withdrawn at any time.</em>

<em></em>

6 0
3 years ago
100 points &amp; brainliest!!
GrogVix [38]

Answer:

i believe its b

Explanation:

8 0
2 years ago
Read 2 more answers
Consider a tax cut which affects not only consumer disposable​ income, but also afterminus−tax earnings from labor supplied to l
noname [10]
<span>in the long run we would expect this tax cut to </span>C.  increase the level of real GDP.
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Either decision will lead to an increase in overall productivity which will contribute to additional Gross Domestic Products.
3 0
3 years ago
On a pay stub, what is the difference between "Net Pay" and YTD Net Pay"?
Len [333]
Net pay is how much you made in a year after taxes YTD Net pay is how much you've made from January to the last day of the pay period before taxes
4 0
3 years ago
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