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4 years ago

Business firms purchase items on credit because they cannot meet their obligations. true false

Business

2 answers:

Gelneren [198K]4 years ago

8 0

Answer:

FALSE

Explanation:

Companies buy items on credit for a variety of reasons. The main one is to maintain working capital. Companies use cash money for their daily needs and for payments that are due on the present date. Thus, when companies buy on credit at present, the payment amount will enter the future payment schedule. On the due date, the credit will be paid. This is normal corporate finance practice and should not be associated with a company's inability to pay its obligations.

Darina [25.2K]4 years ago

6 0

Oddysseyware says the answer is FALSE

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At the end of the current year, Smith Software Inc. reported $27 million of net income and $420 million of retained earnings. Th

Afina-wow [57]

Answer:

Dividends paid is $2 millions

Explanation:

The change in retained earnings during the year can be calculated by taking the difference between the opening and the closing balance which is calculated as under:

Change in Retained Earnings = $420 million - $395 million = $25 millions

The change in retained earnings during the year is the share of Net income retained by the company which means the remainder amount which is not retained by the company is Dividend paid.

And

Dividends paid = $27 million Net Income - $25 million Earnings Retained

Dividends paid = $2 millions

3 0

3 years ago

Different payout policies will attract different types of investors due to the _______.

scZoUnD [109]

Due to the clientele effect, different payment policies will draw various types of investors.

What is Clientele effect?

The clientele effect is a frequent occurrence when shareholder desires have an impact on stock prices.
The way that a certain category of stocks is sought after by individual investors is one aspect of the clientele effect.
Dividend clientele, a term denoting a group of stockholders who have similar views on how a certain firm handles its dividend policy, is an example of this effect in action.
The clientele effect is a shift in share price brought on by business choices that prompts investor responses.
The clientele effect discusses how the needs and objectives of a company's investors can affect its stock price.
According to the clientele effect, when a firm changes one or more of its policies, certain investors' stock holdings will change in accordance with their initial attraction to those policies.

To know more about Clientele effect visit:

brainly.com/question/18917492

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6 0

2 years ago

On June 1, 2020, Forde Auto Manufacturer sells a 4-door sedan to a dealer for $6,000, which includes three years of maintenance.

hichkok12 [17]

Answer:

Part a

Allocation based on Stand Alone Selling Prices :

4 - door Sedan and the 3 years maintenance contract = $6,400
Cash incentive = $100

Part b

Journal entry :

Debit : Cash $130,000

Credit : Revenue - 4 - door Sedan $128,000

Credit : Revenue - Cash incentive $2,000

Explanation:

It is important to identify the step in IFRS 15 - Revenue from Contracts with Customers, which is affected by the question.

Here, Step 2 - Identify the performance obligation in the contract, Step 3 - Determine the Transaction Price, Step 4 - Allocate the Transaction Price to the Performance obligation and Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied. These are explained and applied as follows :

Step 2 - Identify the performance obligation in the contract.

Here, identify the individual promises (Performance Obligations) that the entity has committed to transfer to the customer.

Also the entity identifies each performance obligation that is distinct, or a series of distinct Goods or Services that are substantially the same and have the same pattern of transfer to the customer.

So, the performance obligations are as follows :

4 - door Sedan and the 3 years maintenance contract(these can not be consumed independently from one another)
Cash incentive (can be consumed independently from the rest of the performance obligations)

Step 3 - Determine the Transaction Price

Transaction price is the consideration the entity expects to be entitled to in exchange of goods or services transferred to the customer.

Transaction Price is $6,500 ($6,000 + $400 + $100)

Step 4 - Allocate the Transaction Price to the Performance obligation

Allocation of Transaction Price is done based on Stand Alone Selling Prices.

Stand alone selling prices have already been identified :

4 - door Sedan and the 3 years maintenance contract = $6,400
Cash incentive = $100

Step 5 - Recognize the Revenue as or when the Performance Obligation is Satisfied

Stand alone for 20 vehicles :

4 - door Sedan and the 3 years maintenance contract = $6,400 x 20 = $128,000
Cash incentive = $100 x 20 = $2,000

Journal entry :

Debit : Cash $130,000

Credit : Revenue - 4 - door Sedan $128,000

Credit : Revenue - Cash incentive $2,000

8 0

3 years ago

In an effort to provide some structure to the value perspective, David Garvin of the Harvard Business School identified eight di

mel-nik [20]

Answer:

the product or service was made according to the specifications

Explanation:

Professor David Garvin of Harvard University proposes 8 components or dimensions of quality in order to make the concept of quality of a product or service more operational and favor the understanding of how Quality Management can be applied in companies, both manufacturing and services.

1. Performance

2. Features

3. reliability

4. Conformity to the design

5. Durability

6. Quality in service

7. Aesthetics

6 0

3 years ago

A manufacturing company that produces a single product has provided the following data concerning its most recent month of opera

Ivanshal [37]

Answer:

$12,100

Explanation:

The contribution margin of a product may be defined as the price of the product minus the associated variable cost which results in the incremental profit that is earned when one unit of the product is sold. It is obtained by subtracting the total variable cost from the total sales of the product.

In the context, the total contribution margin of a product for the month under the variable costing would be $12,100 for the manufacturing company.

3 0

3 years ago