Answer: Any previous years’ financial statements are retrospectively restated to reflect the correction.
Explanation:
If an accounting error that is material is discovered in a period after the period that the error was made, every financial statement that was affected will have to be restated so that the correction is reflected by them. This was the entries on the books will be more accurate.
For instance, if a material error that occurred in 2017 is discovered in 2020, then the '17, '18 and the '19 statements have to be corrected to reflect that there was an error that needed correcting.
Answer:
The answer is: Swifty Corporation's break even point for 2017 is 2,700 units sold
Explanation:
Swifty Corporation's break even point (BEP) can be calculated using the following formulas:
- BEP = fixed costs / contribution margin per unit
- contribution margin per unit = sales price - variable costs
The BEP for Swifty Corporation in 2017 is:
BEP = 270,000 / (500 - 400) = 270,000 / 100 = 2,700 units
Answer:
Internal rate of return = 12%
Explanation:
Below is the calculation of internal rate of return:
The new machine requires cash payment = $38198
Annual cash flows = $15904
Time period = 3 years
First divide the cash payment with the annual cash flow and then look at the factor table to find the interest rate at 3rd year.
Factor = 38198 / 15904 = 2.40
Now look the value 2.40 in the table:
Thus Internal rate of return = 12%
Answer:
C) The interest rate is 4 percent and the expected inflation rate is 1 percent.
Explanation:
Generally, a person would prefer to be a lender when the interest rate is higher than the expected inflation. The idea is to compensate the lender that fall in the value of money that will occur as a result of the fall in the value of money caused by the expected inflation. From the question, only situations (A) and (C) meet these criteria. But we have to choose one based on the criteria in the next paragraph.
Specifically, if a person is confronted with more than one situation to a be lender, he will prefer to be a lender under a situation where the weight of contribution of interest rate to the addition of interest and expected inflation is the highest. Given only (A) and (C) meet the first criteria, we can compute the weight of contribution of interest rate as follows:
For situation (A) – Weight of interest rate contribution = [9% × (9% + 7%)] = 0.56, or 56%
For situation (C) – Weight of interest rate contribution = [4% × (4% + 1%)] = 0.80, or 80%
Situation (C)’s weight of interest rate contribution of 80% is higher than the situation (A)’s weight of interest rate contribution of 56%, the person will prefer to be a lender under situation (C) where the interest rate is 4 percent and the expected inflation rate is 1 percent.
