Answer:
A.Incorrect
B. Incorrect
Explanation:
a) A manager might reject a proposal using ROI that the manager would accept using residual income
The statement is incorrect. The reverse is true. Using ROI entails the manager comparing the ROI after a project to the ROI before, where implementing a project makes the ROI after to be less than what it before the project, the Manager would most likely not implement the project. This would happen notwithstanding that the project produces positive residual income.
b) Managers will be more likely to pursue projects that will benefit the entire company when being evaluated on ROI instead of residual income.
This statement is incorrect. ROI makes the manager to pursue his own interest and that of its division at the expense of the group objectives. It leads to sub-optimal decision
<u>Answer:</u> the buying power of the dollar would: decrease.
<u>Explanation:</u>
Purchasing power means the amount of goods that can be bought with the given unit of money. The value of the dollar decreases when there is an inflation. Inflation reduces money value by raising the prices of the goods and services in the country.
Purchasing power can be compared with the salaries received 50 years ago and current salaries. Though the current salaries have increased the prices of the goods have also increased accordingly. Which can also be termed as increased cost of living.
Answer:
13 years
Explanation:
Note that, if we add the annual interest rate of 7.9% to $8000 [(0.079*8000)+8000] we get a total value of $8632. We perform random division of the 8632 with 11 12, 13 years we note that at 13 years the total annual payment is lowest.
Such that 8632/13 years= $664 lower than paying $750.
Answer:
The correct answer is letter "A": determines that expenses related to revenue be reported at the same time the revenue is reported.
Explanation:
According to the matching accounting principle, during the same accounting period, the revenues and expenditures needed to generate such revenues have to be recorded. This is part of the accrual accounting method that specifies expenses and revenue must be recorded when incurred not when cash is received.
Answer:
The increase in earnings is $136511.56
Explanation:
Since the lease is a sale type of lease,it means that as soon as the machinery is delivered to the lessee,profit should be recognized on the lease transaction,which is computed below:
Profit on lease=present value of lease payments-costs
=$274149-$156000
=$118149
However,every six months interest is charged on the lease,which clearly indicates another source of earnings,the interest in the first six months is given below:
Interest=($274149-$44617)*8%
=$18362.56
Please note that interest is charged after lease payment as lease payment is made in advance not in arrears.
Conclusively, the increase in earnings is $118149+$18362.56
That is $136511.56
