Answer:
d. Transactions exposure.
Explanation:
Transactions exposure -
It is the level of uncertainty involved in a business in the international trade face .
It is the risk which currency exchange rates would fluctuate after the firm has taken a financial obligation .
The high level of vulnerability to shift the exchange rates can lead to the loss of the major capital for the international business .
Hence from the information of the question , the correct answer is d. Transactions exposure .
Increase in CM 9,000
Less: Increase in FE 5,000
Change in Net Operating Income
Answer:
The amount may he deduct as interest in 2015 is $960.
Explanation:
As per the provision of IRS (reference to 550), any amount of interest due towards money borrowed for investment purposes (also known as investment interest) can be claimed as a deduction. Therefore, it becomes important to allocate the total amount of loan/borrowing between the amount utilized for personal/business purposes and investment purposes.
In the given case, George has borrowed $20,000, out of which $16,000 has been used for investment purposes, that is, 80% (16,000/20,000*100%), while the remaining 20% (4,000/20,000*100) is used for personal purposes (purchase of four-wheel recreation vehicle).
Out of the total interest of $1,200 (20,000*8%*9/12) due on the amount borrowed, $960 (1,200*80%) can be claimed as deduction (in the form of investment interest). The remaining $240 cannot be claimed as deduction.
Therefore, The amount may he deduct as interest in 2015 is $960.
Answer:
Part 2 Which of the following transactions does not involve an accrual?
- Recording the pre-payment of two years' worth of insurance. THIS IS AN ASSET EXCHANGE TRANSACTION SINCE IT CREATES AN ASSET ACCOUNT, PREPAID INSURANCE, THAT DECREASES AS TIME PASSES
Part 3 The recognition of an expense may be accompanied by which of the following?
- An increase in liabilities. EXPENSES ARE NOT ALWAYS PAID IMMEDIATELY, FOR EXAMPLE UTILITIES, THEY FORM A SHORT TERM LIABILITY UNTIL PAID.
Part 4 The adjusting entry to recognize work completed on unearned revenue involves which of the following?
- A decrease in liabilities and an increase in equity. UNEARNED REVENUE IS A LIABILITY ACCOUNT, AND AS THE WORK IS COMPLETED, REVENUE SHOULD INCREASE, THEREFORE EQUITY WILL INCREASE.
Part 5 Which of the following would cause net income on the accrual basis to be different from (either higher or lower than) "cash provided by operating activities" on the statement of cash flows?
- Paid advertising expense. IF THE COMPANY PAID ADVERTISING EXPENSES ON ACCOUNT.
Explanation:
Answer:
$537.78
Explanation:
In order to find the present value of a future payment we discount it using a discount rate. The formula for that is
Present value = Future value/(1+Rate)^Number of years.
In this case we know the future value is $20,000, the discount rate is 7.5% and the number of years are 50, so we just input these numbers in the formula to find the present value or worth today.
Present value = 20,000/(1+0.075)^50
=537.78
$20,000 due in 50 years would be worth $537.78 today if discounted by 7.5%
