This is a False Statement.
Generally Accepted Accounting Principles (GAAP) need not be followed by managerial accountants when preparing management reports.
Specifically, management accounting aims to
- provide Information for internal Organisation managers
- providing details to governmental regulating bodies
- Information for shareholders, the accounts payable department, and other parties outside the company
- information to shareholders, accounts payables, and other parties outside the company, as well as information to management inside the firm.
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Answer:
Multiple IRRs:
Said another way, Multiple IRRs occur when a project has more than one <em>internal rate of return.</em> The problem arises where a project has non-normal cash flow (non-conventional cash flow pattern).
Internal rate of return (IRR) is one of the most commonly used capital budgeting tools. Investors make decisions by comparing the IRR of the project under consideration with the <em>hurdle rate</em>. If the IRR is greater than the hurdle rate, the project is accepted, otherwise it is rejected. When there are more than two IRRs, it is not exactly clear which IRR to compare with the hurdle rate.
Hurdle rate is the minimum required rate of return which businesses use as a benchmark to decide whether to invest in a project or not.
<em>So a typical situation which can generate negative cashflows which can in turn lead to multiple IRRs towards the end of the project is where the conditions of investment become adverse towards the end of the project.</em>
Imagine that toward the end of the lifecycle of a project, a forecasted increase external costs such as Interest Rate, influenced by government policies translates to an erosion of the bottom line generated by the business in that year.
Period 0 1 3 3 4 5
Unconventional cash flows ($)-19,000 16,000 16,000 6,000 6,000 -52,000
The series is non-conventional cash-flow pattern, which has two sign changes. This is the range in which the net present value of the non-conventional cash flow series is positive. The multiple IRR problem poses a series problem to analysts because the decision is not obvious.
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Answer:
The correct response as per the given statement is "No".
Explanation:
- No, but the given model has never been the dictionary definition of how transactions or judgments are currently taken by people, organizations, and companies.
- Economic models allow everybody to differentiate as well as organize complex sequences of underlying causes functionally that unique expression awareness among the target in less than an economy. These were founded on observations and the formation of overly simplistic circumstances.
Answer:
Lease differential income (loss) 5,380
Explanation:
The computation of differential income or loss from the two alternatives is shown below:-
Sell Lease Differential income (loss)
Revenue $552,000 $728,500 $176,500
($145,700 × 5)
Expense $33,120 $215,000 -$181,880
($552,000 × 6%) ($36,100 + $6,900) × 5
Income $518,880 $513,500 $5,380
(loss)
Lease differential income (loss) 5,380
Explanation:
(1) Roy has changed the rates for prepaid rent. It is important to note that employ costs are investments and deferred rent is a current account of cash. Ideally the following paragraph should have been submitted by Roy: (I took the sum of $100 for the illustration) :
Account Debit Credit
Rental expenses $100
Cash $100
=> Yet Roy has passed this entry and has not passed the one above :
Account Debit Credit
Prepaid Rent $100
Cash $100
As we have seen, no leasing cost was shown in the firm's income statement when the first payment was not made. In other terms, the net income of the organisation was inflated falsely by $100. $100 will be included in the current account section as accrued rent in the deposits and charged as expenses in the income statement of the next year. The consequence of this journal entry is that the amount of net income is falsely raised by the number of payments shown as prepaid rentals.
(2) With the increase in log entries he will receive a higher premium this year as his payment is related to net income. Whoever lost all those stakeholders fails who depends on the financial statements of the organization to decide.
For example, banks would lose because they assume the financial position of the firm is much greater than its actual position.
(3) Roy's decisions can have far-reaching and important consequences for him. This is an accounting fraud case and therefore legal proceedings against both the administrator and the Director at the direction of whose accounts the crime is committed can be taken. It is very probable that the accountant will also be losing his job in the company and face actions by professional bodies such as ACCA, AICPA, etc. because he breaches the corporate ethical guideline and Code.