Complete question:
amber is in charge of preparing an annual budget for her company. as part of the budgeting process, she must estimate COGS and ending inventory. which of the following statements is correct regarding the use of the gross profit method
amber must take a physical inventory to determine ending inventory and COGS
amber may utilize the gross profit method, but must also take a physical inventory
amber may utilize the gross profit method to estimate ending inventory and COGS
Answer:
Amber may utilize the gross profit method to estimate ending inventory and COGS
Explanation:
The gross profit method is a strategy used to measure the value at the end of the product. The method may be used with monthly accounting statements where a physical warehouse is not feasible.
(However, it is not a substitution for an actual physical inventory.) It is often used to measure the volume of lost products incurred by burglary, accident or other disasters.
For example, if a business buys products of $80 and sells them for $100, the gross profit is $20.
Answer:
D) a penalty clause
Explanation:
Penalty clauses are usually not enforced by the courts since they generate an excessive charge against the other party for defaulting or breaching a contract. Generally penalty clauses are considered excessive since they aren't proportional to the damages incurred.
required field means those are feilds or blanks that you have to answer
Answer:
Multiple IRRs:
Said another way, Multiple IRRs occur when a project has more than one <em>internal rate of return.</em> The problem arises where a project has non-normal cash flow (non-conventional cash flow pattern).
Internal rate of return (IRR) is one of the most commonly used capital budgeting tools. Investors make decisions by comparing the IRR of the project under consideration with the <em>hurdle rate</em>. If the IRR is greater than the hurdle rate, the project is accepted, otherwise it is rejected. When there are more than two IRRs, it is not exactly clear which IRR to compare with the hurdle rate.
Hurdle rate is the minimum required rate of return which businesses use as a benchmark to decide whether to invest in a project or not.
<em>So a typical situation which can generate negative cashflows which can in turn lead to multiple IRRs towards the end of the project is where the conditions of investment become adverse towards the end of the project.</em>
Imagine that toward the end of the lifecycle of a project, a forecasted increase external costs such as Interest Rate, influenced by government policies translates to an erosion of the bottom line generated by the business in that year.
Period 0 1 3 3 4 5
Unconventional cash flows ($)-19,000 16,000 16,000 6,000 6,000 -52,000
The series is non-conventional cash-flow pattern, which has two sign changes. This is the range in which the net present value of the non-conventional cash flow series is positive. The multiple IRR problem poses a series problem to analysts because the decision is not obvious.
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