Answer:
C.Prepaid Insurance
Explanation:
Prepaid Insurance is the insurance amount paid in advance, so that company has a receivable because amount is not due yet. It will charged to expense account with the passage of time. Notes Payable, Unearned Revenue, Owner Withdrawals are classified as liabilities and capital contra accounts. So correct option is C. Prepaid Insurance.
Answer: 1. a. Liquidity Ratios
b. Activity Ratios
c. Financial Ratios
d. Profitability Ratios
e. Market Value Ratios
2. A. Seasonal factors can distort data
B. Window dressing might be in effect.
Explanation:
a. Liquidity Ratios give the company an idea of it's ability to access hard currency. Examples include the Current ratio and the Quick ratio.
b. Activity Ratios allows stakeholders know how efficient the company is at running daily operations. Examples include; Receivables Turnover and Asset Turnover ratios.
c. Financial Ratios are very important to the company as they can decide if a company will be able to get loans. They include ratios that measure the firm's ability to pay off debt as well as the overall condition of the firm in terms of it's finances.
Examples include; Net Profit Margin and Debt to Asset ratio.
d. Profitability Ratios
These help ascertain the ability of the business to make returns based on its resources. Examples include Return on Assets and Return on Equity.
e. Market Value Ratio
These essentially help the company and other stake holders know what the company is worth in the market. An example is the Book Value per Share ratio.
2. Seasonal Factors may indeed distort data depending on the type of industry that the firm is into and ratios will usually not show this. For instance, an Ice Cream company will not have strong sales in winter so when interpreting ratio analysis it would be important to note that this could happen.
Another weakness is that ratios are calculated based on the figures that are given by a company. These figures may not truly reflect the actual situation of the company when management supply more optimistic figures than is true. This is called Window Dressing.
It will have the effect of distorting the ratios so that they do not represent a true representation of the actual situation of the company.
Gross monthly income:$1,125
Monthly Federal income tax (11.6%): $130.50
Monthly Social security (FICA) (6.2%): $69.75
Monthly Medicare (1.45%): $16.3125
Monthly State Tax (4%): $45
Monthly Local Tax (0.1%): $1.125
Total Monthly deductions $262.6875
Trey’s NMI $862.3125
Explanation:
Calculation for What is his monthly taxes
First step is to calculate the Gross monthly income
Using this formula
Gross monthly income=Annual salary/Numbers of months in a year
Let plug in the formula
Gross monthly income=$13,500/12 months
Gross monthly income=$1,125
Therefore the Gross monthly income is :$1,125
Monthly Federal income tax (11.6%): $130.50
($1,125*11.6%)
Monthly Social security (FICA) (6.2%): $69.75
($1,125*6.2%)
Monthly Medicare (1.45%): $16.3125
($1,125*1.45%)
Monthly State Tax (4%): $45
($1,125*4%)
Monthly Local Tax (0.1%): $1.125
($1,125*0.1%)
Total Monthly deductions $262.6875
($130.50+$69.75+$16.3125+$45+$1.125)
Trey’s NMI $862.3125
Trey’s NMI=Gross monthly income-Total Monthly deductions
Trey’s NMI=$1,125-$262.6875
Trey’s NMI=$862.3125
Therefore his monthly taxes are:
Gross monthly income:$1,125
Monthly Federal income tax (11.6%): $130.50
Monthly Social security (FICA) (6.2%): $69.75
Monthly Medicare (1.45%): $16.3125
Monthly State Tax (4%): $45
Monthly Local Tax (0.1%): $1.125
Total Monthly deductions $262.6875
Trey’s NMI $862.3125
Answer:
Closing Inventory would be standing at $10000
Explanation:
The cost that forms part of the cost of inventory are all those production costs that are necessary to convert it into finished goods which in this case is:
Production cost = All direct costs are production costs
And
All Direct Cost = $7000 Direct Mat + $9500 Production Workers Wages + $8500 Direct Utilities bills = $25000
And the production cost incurred was for 5000 units which means the unit production cost was $5 ($25000 / 5000 units).
So closing inventory value would be = 2000 closing inventory units * $5
= $10000
