Answer:
Profit leverage effect. The explanation of this question is given below in explanation section.
Explanation:
<u>Profit leverage effect</u> holds that $1 in cost savings increases pretax profits by $1, while a $1 increase in sales increases pretax profits by only $1 multiplied by the pretax profit margin.
The profit leverage effect is about reducing operating expenses that is more efficient than increasing sales. It is situated at the start of the production process of a service or product, the procurement stage is in an excellent position to reduce overall costs, especially in the short term. This is why companies often resort to reducing headcount when they run into financial difficulties. Reducing operating costs is the fastest way to produce a short-term impact on the bottom line. A dollar saved in purchasing almost always has a greater impact on profit than a dollar increase in sales. However, it is remember that, only a small portion of each sales dollar makes it to the bottom line. The rest is spent on the costs of doing business—e.g., cost of administrative, goods sold, logistics, and marketing costs. These costs must be deducted from each sales dollar to determine its contribution to operating profit (it is also known as, earnings before interest and taxes). By contrast, every dollar you save through purchasing goes straight to operating profit.
Answer:
A) $84,500
Explanation:
The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.
The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.
The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.
Hence, amount of cash provided by operating activities
= -$3,000 + $1,000 + $1,500 + $85,000
= $84,500
The increase in asset other than cash is an outflow, increase in liability is an inflow of cash. Depreciation is a non-cash item added back while increase in building and bond payable are investing and financing activities respectively.
Answer:
"Recognized as an impairment loss"
Explanation:
In measuring an impairment loss, the difference between the asset's book value and its fair value is recognized as an impairment loss. Impairment loss is defined as a loss incurred due to a decrease in an asset's fair market value such that the fair market value of the asset falls below its carrying value. When an asset's fair market value (the price at which the asset is being sold in the market) falls below its carrying value (acquisition cost when the asset was purchased minus accumulated depreciation), it is said to be impaired.
The four toys were all marketed for a new kids movie that was coming out, so a lot of kids wanted those four toys becase they had already seen the movie.