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vaieri [72.5K]
3 years ago
8

How might differences in the extent to which countries apply the accounting concept of conservatism (some countries are more con

servative than others) affect profit margins, debt-to-equity ratios, and returns on equity
Business
1 answer:
-BARSIC- [3]3 years ago
6 0

Answer:

Conservatism in Accounting refers to the policy of being more pessimistic than optimistic. This policy believes that future losses should be anticipated over future gains as future losses are more damaging and probable. It is essentially 'Playing Safe' Accounting. This leads to Income and Assets being understated and Expenses and Liabilities being overstated.

Profit Margins.

As the policy allows for the anticipation and recognition of expenses more than gains, Profit margins will be lower in this type of accounting as Revenue will be less but Expenses will be more.

Debt-to-Equity Ratios

Debt to Equity ratios will be higher because this policy calls for a speedier recognition of Liabilities as well. With the formula for Debt to Equity being Debt over Equity, a larger recognition of debt will mean this equation will yield higher figures. Also a component of Equity is Retained Earnings which comes from Net income and as already stated, this will be less under this policy thus decreasing the denominator of this equation as well.

Returns on Equity.

Return on Equity is calculated by dividing the Net Income by Equity. This figure will be smaller but not by much because this policy as already shown will reduce the both the Net income and the Equity but the Net Income will likely suffer a greater hit than Equity.

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All of the following are weaknesses of the payback period:_________ (You may select more than one answer. Single click the box w
sashaice [31]

Answer:

c. it ignores all cash flows after the payback period

d. it ignores the time value of money.

Explanation:

Payback period as far as capital budgeting is concerned can be regarded as time that is required for recouping of funds that is been expended during setting up of an investment, or the funds required to get to break-even point. It should be noted that weaknesses of the payback period are;

✓. it ignores all cash flows after the payback period

✓ it ignores the time value of money.

5 0
3 years ago
In your own understanding, compare and contrast "business markets versus consumer-goods markets."​
Anna35 [415]

Answer:

Business markets and consumer-goods markets differ in relation to the consumer and the form of operation. Business markets are formed by companies that provide products or services for other companies to manufacture their final products and services. Consumer goods markets, on the other hand, refer to companies that produce products and services already intended for final consumers.

The difference between them is that in business markets there are some significant advantages that reduce competitiveness, such as the creation of a long-term relationship with the customer, since the impact of buying and selling is greater, which also ensures greater stability business, since companies need constant inputs and services for their production of products and services to sell to the final consumer.

3 0
2 years ago
Smithland is a nation with a traditional economy. economic decisions in smithland are based on
lisov135 [29]
The answer is, <span>economic decisions in Smithland are based on "customs of the past".
</span>
Traditional economy refers to an original economic system or framework in which customs, traditions, and convictions help shape the merchandise and the administrations the economy produces, and additionally the principles and way of their circulation. Nations that utilize this kind of financial framework are often rural and farm-based.
5 0
3 years ago
When the macroeconomy is experiencing a higher than natural rate of unemployment, it must be because
Alona [7]

Answer:

wages cannot adjust downward quickly and easily.

Explanation:

In a situation where the macroeconomy is experiencing a higher than the natural rate of unemployment, it must be because "wages cannot adjust downward quickly and easily."

Given that wages are arguably the most significant aspect to entice employees or people to work and get paid. Hence, where the wages are not enough to cause for the employees, there tends to be a situation where wages cannot adjust downward quickly and easily. And therefore, people would not want to work where there is low pay, and eventually, unemployment increases.

7 0
3 years ago
Explain how the following event would affect the cost curves A company's primary supplier of resources implements a 3 percent pr
Alenkasestr [34]

Answer:

Marginal cost, average variable cost, and average total cost will increase. Average fixed cost will not change.

Explanation:

Marginal Cost is the change in total cost as a result of producing one extra unit of output.

Variable cost is cost that varies with output level. Average variable cost = variable cost / quantity produced

Fixed cost is cost that doesn't vary with the level of output produced. Average fixed cost = Fixed cost / quantity produced.

Total cost is the sum of fixed and variable cost. average total cost is total cost / quantity produced.

If the price of supplies increase, the cost of production increases and average total cost, average variable cost and marginal cost would increase.

Fixed cost would remain the same.

I hope my answer helps you

5 0
3 years ago
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