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miv72 [106K]
3 years ago
7

The cost constraint suggests that, even when the cost of providing accounting information exceeds its benefit, the financial acc

ounting information should always be provided. True or false?
Business
1 answer:
Alekssandra [29.7K]3 years ago
3 0

Answer:

False

Explanation:

The GAAP established that when the benefits of obtaining accounting information are lower than the costs of providing that information, the information should not be provided.

For example, sometimes there are very small differences in certain accounts that don't allow a balance sheet to be balanced. If the accounting error is very small, e.g. just a few hundred dollars, then it is not reasonable to have a whole audit team check all the financial statements again to determine what caused the error. An adjusting entry could be made to close the account balances.

Imagine you are an auditor that must check the physical inventory of a factory and some boxes containing supplies are misplaced. It might take you a whole day to count again all the supplies and materials, but is it worth it? If the supplies were really expensive, probably yes, but if they were cheap components, then probably no.

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Gibson Energy Ltd.’s general ledger account for Cash in Bank showed the following at December 31, 2019:
viktelen [127]

Answer:

1. Adjusted cash balance = Adjusted bank statement balance = $133,620.

2. See the adjusting journal entries and explanation in part 2. below.

Explanation:

Note: The data in the question are merged and they are first sorted in the attached excel file before the questions are answered as follows:

1. Complete the bank reconciliation at December 31, 2019.

The bank reconciliation is presented in two ways as follows:

<u>a) Starting with cash book balance</u>

Gibson Energy Ltd.

Bank Reconciliation  

at 31 December 2019  

<u>Particulars                                                                  Amount ($)    </u>

Cash book bal. at 31 Dec. yet to be reconciled          62,000

Add:

Collected note receivable from XYZ Corp                  80,000

Less:  

Dishonored NSF check                                                 (7,000)

Overdraft interest expense                                            (1,320)

Bank service charge                                                 <u>         (60)   </u>

Adjusted cash balance at Dec 31                           <u>   133,620   </u>

<u>b) Starting with bank statement balance</u>

Gibson Energy Ltd.

Bank Reconciliation  

at 31 December 2019  

<u>Particulars                                                                       Amount ($)    </u>

Bank statement bal. at Dec 31 yet to reconciled              131,620

Add:  

Cash deposited on December 9th yet be credited          85,000

Cash deposited on December 31 yet be credited            15,000

Check #52094 wrongly drawn                                           62,000

Less:

Outstanding checks 233                                                    (83,000)

Outstanding checks 239                                                <u>    (77,000)   </u>

Adjusted bank statement balance at Dec. 31             <u>     133,620   </u>

2. Prepare the adjusting journal entries required to make the Cash in Bank account in the general ledger agree with the adjusted cash balance on the December 31 bank reconciliation. Include descriptions.

<u>Date      Accounts title & explanation              DR ($)           CR ($)  </u>

31 Dec 19    Cash                                                80,000  

                   Note Receivable                                                     78,049

                   Interest on note receivable                                       1,951

<em><u>                   (To record note receivable & int. collected from XYZ)     </u></em>

31 Dec 19   Overdraft interest expense                1,320

                  Service charge                                        60

                  Cash                                                                           1,380

<em><u>                    (To record interest expense and bank charges)                   </u></em>

31 Dec 19   Account Receivable                           7,000

                    Cash                                                                           7,000

<em><u>                   (To record NSF check dishonored)                                       </u></em>

Download xlsx
3 0
3 years ago
Within some types of land use, business location may be determined by the type of service or products that are offered to consum
kupik [55]

Answer:

The correct answer is letter "C": supermarket.

Explanation:

A convenience store is a retail shop that offers daily-use goods to consumers such as groceries, drugs (that require no prescription), magazines, among others. Businessmen take profit from these stores thanks to the wide variety of products being sold.

In that sense, <em>supermarkets </em>would fall into this category since they match perfectly with the definition of a convenience store due to the diverse kind of goods they offer.

3 0
3 years ago
For studying demand relationships for a proposed new product that no one has ever used before, what would be the best method to
dolphi86 [110]

Answer:

the answer is D) all of the above are equally useful in this case

Explanation:

why? every company who is planing to offers a new good or product its important to know to which market you want to sell it, and the average age, either the company who had been working with the same product, perhaps more capacity of production in the same market, you have to do a market strategy to know if you are able to get into the new market.

5 0
3 years ago
A salesperson for FS Tools asked Justin, a cabinet maker, "If I can show you how to cut melamine, high-pressure laminates, and f
GalinKa [24]

Answer:

A. need payoff

Explanation:

Based on the information provided within the question it seems that the salesperson's SPIN technique is an example of a need payoff. This term refers to asking an individual/customer about the value or importance that something can provide them. Which is exactly what the salesperson is stating by asking "how much money (value) can this save you?"

5 0
3 years ago
Suppose that you have the following information for an economy:______.
galina1969 [7]

Answer:

Part 1. When real GDP is equal to $4,500, aggregate expenditure is equal to <u>$4,600</u>.

Part 2. When real GDP is equal to $5,000, aggregate expenditure is equal to <u>$5,000</u>.

Part 3. When real GDP is equal to $5,500, aggregate expenditure is equal to <u>$5,400</u>.

Explanation:

The aggregate expenditure (AE) can be calculated using the following formula:

AE = (A + (MPC * Y)) + PI + G + NX  ………………. (1)

Where;

AE = aggregate expenditure = ?

A = Autonomous consumption = $500

MPC = Marginal propensity to consume = 0.80

Y = Real GDP

PI = Planned investment = $600

G = Government spending = $300

NX = Net exports = -$400

Based on the above, we can now proceed as follows:

Part 1. When real GDP is equal to $4,500, aggregate expenditure is equal to $ _____.

This implies that:

Y = Real GDP = $4,500

Substituting this and other values given above into equation (1), we have:

AE = ($500 + (0.80 * $4,500)) + $600 + $300 - $400 = $4,600

Therefore, when real GDP is equal to $4,500, aggregate expenditure is equal to <u>$4,600</u>.

Part 2. When real GDP is equal to $5,000, aggregate expenditure is equal to $ _____.

This implies that:

Y = Real GDP = $5,000

Substituting this and other values given above into equation (1), we have:

AE = ($500 + (0.80 * $5,000)) + $600 + $300 - $400 = $5,000

Therefore, when real GDP is equal to $5,000, aggregate expenditure is equal to <u>$5,000</u>.

Part 3. When real GDP is equal to $5,500, aggregate expenditure is equal to $ _____.

This implies that:

Y = Real GDP = $5,500

Substituting this and other values given above into equation (1), we have:

AE = ($500 + (0.80 * $5,500)) + $600 + $300 - $400 = $5,400

Therefore, when real GDP is equal to $5,500, aggregate expenditure is equal to <u>$5,400</u>.

6 0
2 years ago
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