Answer:
The answer is a. $25.00
Explanation:
The bondholder's cash flow in one-year time from holding a TrunkLine's bond is calculated as:
(The possibility of TrunkLine doing well x Repayment receipt in case TrunkLine doing well) + (The possibility of TrunkLine doing poorly x Repayment receipt in case TrunkLine doing poorly) = (0.5 x 35) + (0.5 x 20) = $27.50.
The current price bondholders are willing to pay for a bond is equal to the present value of a bond's cash flow in one-year time, discounted at the interest rate on the bond 10% which is calculated as below:
27.50 / (1+10%)^1 = $25
Thus, the correct choice is a. $25.00
Answer:
d. Salary Expense
Explanation:
Salary Expense refers to the salaries or fixed payment by an organization to it's employees. It is an expense and as per the rules of accounting, "debit all expenses and losses, credit all incomes and gains."
Salary expense represents salary which has been earned whether paid or not, as per the accrual concept of accounting.
Thus, a credit balance in Salary Expense represents a likely error since such an account is usually associated with a debit balance, being an expense.
Answer:
$444,000
Explanation:
current earnings and profits = (taxable income - income taxes) - meals expense + tax exempt income = ($600,000 - $155,000) - $3,000 + $2,000 = $444,000
Disallowed expenses are expenses made by an individual or company that the IRS doesn't allow to be deducted, e.g. meals. Tax exempt income is income that is not taxed by the IRS, e.g. DRD includes at least 70% of dividends received.
Deferred gains or unearned revenues are considered a liability and are not included in the income statement.
Answer:
True.
Explanation:
Managerial accounting involves managers using accounting information to better inform themselves before making business decisions. It involves analysing, interpreting and communicating financial data to managers to aid in achievement of organisation's goals.
Managerial accounting is for internal use in the business. Data is modified to meet specific need of the end-user. For example a manager may want to see sales figures for a quarter compared to business target. This will give an idea if the business is meeting it's objectives.
Beak-even point (BEP) in business is the point at which total cost and total revenue are equal. There is no net gain or loss, and one has "broken even", though opportunity costs have been paid and capital has received the risk-adjusted, expected return.
The formula for break-even is given by:
BEP=(Fixed Costs)/(Sales Price per Unit-Variable Cost per Unit)
From the above formula we can conclude that:
When Fixed costs reduces, the BEP decreases. Therefore the answer is [a]
