Answer:
Current Ratio = 7.59
Acid test Ratio = 1.28
Gross margin ratio = (Gross profit)/(Total Revenue)
where gross profit = Sales- Cost Of Sales
Explanation:
The first ratio that we must calculate is the current ratio which is the measure of current assets and current liabilities which the formula is :
Current ratio = (current assets)/ (current liabilities)
which current assets are assets that are liquidated in 12 months or less which given here the store supplies balance of $2050 then further we have Inventory( Stock) balance at the year end of $10100
Then current liabilities are those liabilities that can be paid in 12 months or less of which here we are given expired insurance and an admin expense which means that these are Differed expenses which are a liability that will be paid off in the next accounting period which amount to $1600. Therefore the current ratio will be ; Current Ratio = ($2050+$10100)/($1600)
Current ratio = 7.59 correct to two decimal places.
The acid test ratio is calculated by adding up all the most liquid able assets over the total liabilities in the company. the formula is
Acid test ratio = (most liquidable assets)/(Total Liabilities)
Acid Test Ratio = ($2050)/($1600)
Acid Test Ratio = 1.28 correct to two decimal places
where the most liquidable asset is the store supplies and the total given liabilities are the one given for the expired insurance and an admin expense.
The last ratio is the gross margin ratio which is calculated by dividing he gross profit of a company by the total revenue a company gains which the formula is Gross Margin Ratio = (Gross profit)/(Total Revenue), where Gross profit = Sales - Cost of Sales. Then to find the Total Revenue which is the Gross Profit - Operating expenses.
Answer:
True
Explanation:
Consumer price index measures the changes in price level of a basket of goods.
If consumer price index falls if means price level has fallen , goods become cheaper and the same amount of money can buy more quantities of goods and services.
Conversely if consumer price index rises, price level has increased, goods and services become more expensive and more amount of money would be needed to maintain the same level of consumption.
CPI is calculated as cost of basket of goods in a given year / cost of basket of goods in a base year
I hope my answer helps you
Answer:
The two factors that determine the form of ownership of a business are;
1. Start-up costs
2. Level of control desired
Explanation:
The form of ownership of a business defines the structure with which the business will be governed. There are different form of business ownership that exist, namely; sole proprietorship, partnerships and corporations. They all differ in different aspects as shown;
1. Sole proprietorship
A sole proprietorship as the name suggests is a business structure where there is only one owner. The owner is in charge of the business profits and liabilities. It is generally a simple business structure that needs a small company, where filing tax returns are very easy.
2. Partnerships
A partnership is a business structure where two or more parties come together to form a business. The parties are responsible for the profits depending on the amount contributed by each party. Each individual always pool their resources towards the successful completion of a given project therefor each party is liable for their own profits and risks.
3. Corporations
Corporation are similar in a way to partnerships since they involve two or more parties with the major difference being that a corporation is a separate legal entity. So the liability is always to the corporation itself and not to the parties that constitute the corporation.
Two factors that determine the form of ownership of the business are;
1. Start-up costs: if you intend to minimize the cost of starting up you business then a sole proprietorship is the best option due to its simplistic nature and very minimal start-up expenses.
2. Level of control desired: Depending on the level of control one would like to have in the business regarding decision making and the daily operations of the business. If one needs a larger level of control, the best option would be sole proprietorship, while minimal control would require a coorporation form of ownership.
Answer:
September 11 2017
Dr Cash 600
Cr Sales revenue 600
(to record sales revenue on cash)
Dr Cost of good sold 370
Cr Inventory 370
(to record cost of good sold)
Dr Warranty expenses 54
Cr Warranty liabilities 54
(to accrue for warranty liabilities)
Jul 24 2018
Dr Warranty liabilities 42
Cr Inventory 42
(to record warranty services provided which was accrued)
Explanation:
11 Sep 2017:
- As sell of $600 is made on cash with the cost of good sold is $370, we Dr Cash 600 and Dr Cost of good sold 370 to record increase in cash and in Cost of good sold; and Cr Sales 600 and Cr Inventory 370 to record increase in sales and decrease in Inventory delivered.
- Warranty expenses should be recorded at the time to ensure matching of cost and revenue. Warranty expenses is estimated at 9% of sales, so it will be 9% x 600 = $54. Expenses is recorded and liabilities is accrued.
Jul 24 2018:
Warranty liabilities which was accrued actually occurs. So we Dr Liability by the expenses actually incurred and Cr Inventory consumed for the warranty services $42.
Answer:
$38,851 approx
Explanation:
As per the information provided in the question, the minimum annual rate of return would be at-least equal to the usual rate of return the investor (here uncle) earns. Here it is 9% per annum.
Anything earned below this rate of return will not satisfy the investor since this represents the minimum required rate of return.
A=
Where A= Amount
P= Principal
r= Annual Rate Of Interest
n= period of loan
Therefore, A=
A= $38,850.87 or $38,851 approx.