Answer:
(a)Income statement:
Insurance expense - understated
net income - overstated
(b) balance sheet:
prepaid insurance - overstated
stockholders equity - overstated
Explanation:
Answer:
All answers are correct except Money Supply
Explanation:
Fiscal policy affects aggregate demand through government spending and taxes. Government may increase taxes to increase revenue or discourage the consumption of a product. On the flipside, they may reduce taxes to stimulate spending, redistribute income, increase aggregate demand among other objectives.
Money supply is a monetary policy and it is used by the central bank to achieve certain objectives (reduce inflation, stimulate growth, increase demand, etc.)
Government spending is a fiscal policy that government uses to achieve a set of objectives (i.e. to supply goods and services that are not provided by the market or private sector – construct bridges, provide health facilities, social programmes for the poor among others).
Taxes – Tax is a fiscal policy tool used by the government to generate revenue, encourage or discourage the consumption of certain products or affect aggregate demand through income redistribution.
Trade policy could be in the form taxes (i.e. tariffs, import duties, custom duties among others). Trade policy is a fiscal policy as government can use it to control aggregate demand by placing embargo on the importation of certain products to reduce the demand of such products in the local economy.
Answer:
No, we should not buy the stock
Explanation:
The question states that after 55 years, the friend intends to close the company. That implies that after 55 years the value of the purchased share would be $0.
For next 55 years he has promised to pay $9 as a dividend each year.
The share selling price is $124 per share.
To decide whether to buy the share or not, we must first calculate the present value of the dividends to be paid, and then compare that value to the share's selling price and if the present value of the dividends received is greater than the share's sale price then the share will not be purchased.
Dividend per year = $9
Rate of return = 8%
Period = 55 years
Present Value = $9(P/A, 8%, 55)
Present Value = $110.87
The present value of dividends to be received is $110.87
The present value of dividends to be received is less than the selling price of share.
So, we should not buy the stock.
Answer: The overall price level increased.
Explanation: The rise in the overall price level is termed as inflation. From the information we can see that the average price of the three goods in 2015 was $7.50. A year later, the average price changed to $7.58.
Therefore, the overall price level rose as the average price level increased from $7.50 to $7.58.
