Answer:
True or False Statements about the conceptual framework:
(a) False: The fundamental qualitative characteristics that make accounting information useful are relevance and faithful representation, which suggest materiality and completeness respectively.
(b) False: Relevant information must also be material in a financial statement user's decision, in addition to having predictive and confirmatory values.
(c) False: It is information that is relevant that is characterized as having predictive or confirmatory value, and not information that shows faithful representation.
(d) False: Comparability also refers to comparisons of a firm over time (which is appropriately described as consistency). This is in addition to the similar reporting of information by different companies.
(e) False: Enhancing characteristics do not relate only to faithful representation but also to relevance.
(f) True.
Explanation:
Faithful representation implies completeness. Relevance means that the disclosure will attract important consideration and is material to the matter. Therefore, users of financial reports base their decisions on relevant information and not irrelevant details.
Answer:
The firm’s cash flow to creditors during 2018 is -$85,000
Explanation:
The steps to compute the firm’s cash flow to creditors during 2018 is shown below:
Step 1: First the new debt is need to be calculated
Step 2: The step 1 amount is subtracted from interest expense amount. And Finally, the cash flow to creditors came
where,
Increase debt = 2018 long term debt - 2017 long term debt
= $2.21 million - $1.87 million
= 0.34 million = $3,40,000
Now,
Cash flow to creditors = Interest expense - Increase debt
= $255,000 - $3,40,000
= -$85,000
Thus, the firm’s cash flow to creditors during 2018 is -$85,000
Answer:
The answer is B.
Explanation:
Option B. Wages of sales person are the example of a Selling and Administrative cost. Other examples are rents, distribution cost etc.
Option C is wrong. Wages of production machine operators is a direct wage. It will form part of cost of sales.
Option D is wrong. Insurance on factory equipment cannot be attributable to selling cost.
Answer:
The correct option is B, higher than the net operating income under variable costing
Explanation:
In calculating the net operating profit under variable costing, the fixed manufacturing cost of $15,000 is deducted as a whole in arriving at net profit.
However, under absorption costing method, only the goods sold are charged with their own portion of fixed manufacturing cost totaling $15,000
Fixed under variable costing method=$15,000
fixed cost under absorption costing method=$15,000/5,000*4500=$13500
Since fixed cost is lower under absorption costing method, net profit tends to be higher.
The prospect of greater market share and setting themselves apart from the competition is an incentive for firms to innovate and make better products. But no firm possesses a dominant market share in perfect competition. Profit margins are also fixed by demand and supply.
A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods. If a perfectly competitive firm attempts to charge even a tiny amount more than the market price, it will be unable to make any sales.
Perfect competition occurs when there are many sellers, there is easy entry and exiting of firms, products are identical from one seller to another, and sellers are price takers.
The market structure is the conditions in an industry, such as number of sellers, how easy or difficult it is for a new firm to enter, and the type of products that are sold.
Hope this helps:)
