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3 years ago

Two examples of generally accepted accounting principles are:

1 answer:

8 0

The answer to this question is: accounting for leases and accounting for fair value assets
Leases and fair value assets is often used by companies in order to make their company valuation seem higher than it supposed to be. So, standardized rules regarding the proper way to make the valuation should be written under the Generally accepted accounting principles.

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What is the cost of equity for a firm that has a beta of 1.2 if the risk-free rate of return is 2.9 percent and the expected mar

Gnesinka [82]

13.1$ is the cost of equity for a firm that has a beta of 1.2 if the risk-free rate of return is 2.9 percent and the expected market return is 11.4 percent.

The cost of equity of a firm represents the compensation that the market demands in exchange for the asset ownership and bearing its risk. The traditional formula which comprises the cost of equity is the dividend capitalization model as well as the capital asset pricing model (CAPM).

Using the CAPM model or capital asset pricing model which determines the cost of equity financing would be equated as

Cost of Equity = Risk-Free Rate of Return + Beta × (Market Rate of Return – Risk-Free Rate of Return)

Here, the risk-free rate determines the minimum rate of return, to which the excess return is added.

Beta is referred to as the standard CAPM measure of systematic risk and has the tendency for the return of a security to move parallel with the whole return of the stock market.

In the CAPM model, the market return of an asset is the risk-free rate plus the premium which is multiplied by the beta of the asset.

So, here risk-free rate return RF=2.9

The expected market rate of return RM=11.4

Beta (β) =1.2

According to the CAPM model,

Cost of equity Re =RF+ β(RM-RF)

=2.9+1.2(11.4-2.9)

=2.9+10.2

=13.1

Therefore 13.1$ is the cost of equity.

Learn to know more about the estimation of the cost of equity by the CAPM model at,

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8 0

2 years ago

When Factory Wages Payable costs for labor are allocated in a job cost accounting system: rev: 11_27_2015_QC_CS-34722 Multiple C

kogti [31]

Answer:

When Factory Wages Payable costs for labor are allocated in a job cost accounting system:

Direct Labor and Indirect Labor are debited and Factory Wages Payable is credited.

Explanation:

The Factory Wages Payable costs will always be allocated to direct labor or indirect labor. These two accounts will, therefore, be debited while Factory Wages Payable is credited for these unpaid factory wages at the end of the accounting period.

7 0

3 years ago

Sunland Company just began business and made the following four inventory purchases in June: June 1 144 units $1000 June 10 192

Sergio039 [100]

Answer:

The First-in, First-out has the lower cost of goods sold, therefore, it will provide with a higher gross profit.

Explanation:

Giving the following information:

June 1: 144 units for $1000 ($6.94 per unit)

June 10: 192 units for $1500 ($7.81 per unit)

June 15: 192 units for $1610 ($8.38 per unit)

June 28: 144 units for $1270 ($8.82 per unit)

Ending inventory in units= 200 units on hand.

The method that will provide a higher gross profit is the one with the lower cost of goods sold.

Inventory methods:

FIFO (first-in, first-out):

COGS= 144*6.94 + 192*7.81 + 136*8.38= $3,639

LIFO (last-in, lsdt-out)

COGS= 144*8.82 + 192*8.38 + 136*7.81= $3,941

Weighted-average:

Average price= (6.94 + 7.81 + 8.38 + 8.82)/4= $7.99

Now, we can calculate the cost of goods sold:

COGS= 7.99*472= $3,771.28

The First-in, First-out has the lower cost of goods sold, therefore, it will provide with a higher gross profit.

8 0

3 years ago

Oriole Company uses the percentage of receivables method for recording bad debts expense. The accounts receivable balance is $28

Tju [1.3M]

Answer:

Dr. Bad debt expense. $11,200

---------To Allowance for doubtful accounts $11,200

Explanation:

Given that:

Accounts receivable balance = $280,000

Total credit sales = $2,810,000

5% of accounts receivables will be bad debt = $280,00 × 5% = $14,000

Credit balance allowance for doubtful account = $2,800 and it must increase to $14,000 I.e $14,000 - $2,800 = $11,200

Adjusting journal entry

Dr Bad debt expense $11,200

-------- Cr Allowance for doubtful accounts $11,200

8 0

3 years ago

Provide the name of the financial institution and the account name

SIZIF [17.4K]

Explanation:

Global investment banks include JPMorgan Chase, Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Credit Suisse, and Deutsche Bank.

7 0

2 years ago

Read 2 more answers