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malfutka [58]
3 years ago
13

If the ending inventory in the previous period was understated $17,000 and the ending inventory in the current period was overst

ated $27,000. Which of the following is understated in the current period?
a. Owner's equity
b. Cost of goods sold
c. Net income
d. All the other answers are correct
Business
1 answer:
kotegsom [21]3 years ago
4 0

Answer:

In the current period,

b. Cost of goods sold

Explanation:

With the current period's beginning inventory (or previous period's ending inventory) understated by $17,000 and the overstatement of the current period's ending inventory by $27,000, it implies that the Cost of goods sold is understated by $10,000.  Once this cost is understated, the net income will be overstated, as well as the owner's equity (via the retained earnings).

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Question 4
SashulF [63]

1. The calculated capital budgeting techniques yielded the following results:

A. Accounting Rate of Return (AROR) is <u>28%</u>.

B. Payback Period Technique (PBP) is <u>5 years</u>.

C. Net Present Value Technique (NPV) is <u>RM33,588</u>.

D. Profitability Index (PI) is <u>1.056</u>.

2. The project should be accepted based on the positive results above.

3. The importance of capital budgeting techniques lies in the fact that they aid capital decision-making by measuring their probable outcomes.

<h3>What are capital budgeting techniques?</h3>

Capital budgeting techniques are capital investment evaluation tools.

Some of the capital budget tools include the Payback Period, Discounted Payment Period, Net Present Value, Profitability Index, Internal Rate of Return, and Modified Internal Rate of Return.

These capital budgeting techniques help management to evaluate capital projects and to choose investment strategies.

<h3>Data and Calculations:</h3>

Investment cost = RM600,000

Cost of capital = 12%

            Net Cash Flows      PV Factor     Present Value

Year 0     RM600,000               1              (RM600,000)

Year 1       RM100,000           0.893                  89,300

Year 2            110,000            0.797                  87,670

Year 3            121,000            0.712                   86,152

Year 4            133,100            0.636                 84,652

Year 5            146,410            0.567                  83,014

Year 6    RM400,000            0.507              202,800

Present value of cash flows =                 RM633,588

Net Present Value                                      RM33,588

Total Net Cash Flows = RM1,010,510

Average Net Cash flows = RM168,418 (RM1,010,510/6)

Accounting Rate of Return = Average Income/Initial Cost

= 28% (RM168,418/RM600,000 x 100)

Payback period = 5 years

NPV = Initial Investment - PV of net cash flows

= RM33,588

Profitability Index = Present value of cash flows/Initial Cost

= 1.056 (RM633,588/RM600,000)

Learn more about capital budgeting techniques at brainly.com/question/17159659

#SPJ1

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Had the government taken over the assets of Global Trading without compensation, and not taken over the assets of any other comp
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Expropriation means to take possession of a private property for public use.

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Government takes over those properties with the aim of using them to benefit the public. The property owners might be compensated.

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