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Charra [1.4K]
3 years ago
9

Which capital budgeting method uses accrual accounting, rather than net cash inflows, as a basis for calculations?

Business
2 answers:
jeka943 years ago
7 0

Answer:

Accounting Rate of Return

Explanation:

Accounting Rate of Return is the capital budgeting method that uses accrual accounting, rather than net cash inflows, as a basis for calculations.

The Accounting rate of return (ARR) capital budgeting methodology and a financial ratio which takes no recognition of time value of money. It is calculated based on the net income of the capital investment(s) proposed.

In conclusion the reason why it is argued that the Accounting Rate of Return uses accrual accounting is because the net income from the investment which is used in its appraisal, is derived based on the accrual basis since <u>such net income is recognized when earned not when received</u>

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Anastaziya [24]3 years ago
4 0

Answer:

Annual rate of return method

Explanation:

Annual rate of return method unlike some other capital budgeting techniques uses a data that is consistent with accrual concepts. the income it uses is the estimated annual net income of the entity.

Below is the formula used for  Annual rate of return method:

Annual rate of return = Estimated Annual net income/Average Investment.

It ignore the cash inflow.                                    

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Sometimes it is better to leave a task and come back later if you do not feel like doing it at the time
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3 years ago
. Eric has another​ get-rich-quick idea, but needs funding to support it. He chooses an​ all-debt funding scenario. He will borr
Sergio039 [100]

Answer:

6.04%

Explanation:

The weighted average cost of capital (WACC) can be described as the average rate that is expected that a business will pay to finance its assets to all holders of its security.

The weighted average cost of capital (WACC) can be estimated as the summation of the products of the weight of each loan in the total loan and their interest rate for this question as follows:

Total loan amount = $1,823 + $1,533 + $644 = 4,000

Weight of loan from Wendy = $1,823 / $4,000 = 0.46, or 46%

Weight of loan from Bebe = $1,533 / $4,000 = 0.38, or 38%

Weight of loan from Shelly = $644 / $4,000 = 0.16, or 16%

Weighted average cost of capital  = (46% * 4%) + (38% * 6%) + (16% * 12%) = 6.04%.

Therefore, the weighted average cost of capital for​ Eric is 6.04%.

7 0
3 years ago
A job cost sheet of Fugate Company is given below.
Vera_Pavlovna [14]

Answer:

A.Direct material 5,320

Direct labour 1,700

Manufacturing overhead 2,550

B. Total cost 9,570

Unit cost 6.38

C. Dr Finished goods inventory account 9,570

Cr Work in Process inventory account 9,570

Explanation:

A. Calculation for the predetemined manufacturing overhead rate

Date Direct material Direct Labour Manufacturing Overhead

5/10 1,330

12 1,120

15 550 825 825

22 480 720 720

24 1,000

27 1,870

31 670 1,005

Total 5,320 1,700 2,550

B. Calculation for the total cost and the unit cost of the completed job

Cost of Completed job :

Direct material 5,320

Direct Labour 1,700

Manufacturing Overhead 2,550

Total Cost 9,570

Unit Cost = Total Cost / Number of units

Unit cost = 9,570/1,500

Unit cost = 6.38

C.Therefore when a job is fully completed, thebFinished goods inventory account will be

debited with the correspondent credit of Work in progress account.

Journal entry

May.31

Dr Finished goods inventory account 9,570

Cr Work in Process inventory account 9,570

4 0
3 years ago
All of the following statements are true for both mutual funds and variable annuities that are in the accumulation phase EXCEPT:
Ksju [112]

Answer: C. both investments grow tax-deferred

Explanation:

A mutual fund consist of the money gotten from investors for the investment in securities such as bonds, stocks, money market instruments, etc.

A variable annuity is refered to as a non-exempt security as the purchaser is the on who bears the investment risk

The following are true for the mutual funds and the variable annuities that are in the accumulation phase:

• Both are regulated a under the Investment Company Act of 1940.

• The underlying portfolios are managed

• The return to investors is dependent on the performance of the securities in the underlying portfolio.

It should be noted that the option that both the mutual fund and the variable annuity grow tax-deferred is incorrect.

5 0
3 years ago
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