Answer:
The correct option is B
Explanation:
In order to compute the profit, the accountant consider the Explicit cost so,
Explicit Cost = Borrowed amount × Interest rate + Ingredients amount
= $30,000 × 3% + $25,000
= $259,000
Where Revenue is $60,000
Profit = Revenue - Explicit Cost
= $60,000 - $259,000
= $34,100
Economic Profit is computed as:
Economic Profit = Total Profit - Implicit Cost
= $34,100 - $40,600
= - $6,500
where
Implicit Cost = Salary + Interest
= $40,000 + ($20,000 × 3%)
= $40,000 + $600
= $40,600
Therefore, Louis says profit is $34,100 and Greg says she lost $6,500
Answer:
1. Lack of ownership
2. Higher taxation
3. Legalities and formalities
Explanation:
An incorporated company is one that has a separate legal entity from that of its owner and shareholders. Disadvantages of an incorporated company include:
- <em>Lack of ownership</em>
An incorporated business is a separate entity from its owner. Hence, separate bank accounts would be required along with separate business identification since personal identification would not be sufficient. At the same time, personal funds must be kept separate from business funds. Mixture of the two is an offense against the law. Also, as shareholders are involved, they may have voting rights, hence, the owner will not have a complete say in all business activities.
Incorporated companies are expected to pay higher taxes whilst others may have minimum taxable limits. The owner will have to pay income tax as well as corporate taxes. They will also accumulate other expenses such as accounts and legal fees whilst processing these complex taxation methods.
- <em>Legalities and formalities</em>
Incorporating a business in itself requires complex procedures and a lot of paperwork. After this has been accomplished, the company is still expected to follow strict codes of conduct such as those provided by the Companies Act. This would include the way borrowings and lending occur, investments, dividend provisions, meetings and audits. They will also have to register documents under the Registrar of Companies.
A decrease in aggregate demand causes the price level to fall. If the government takes no action to
counter this, then the actual price level will be below the price level that people expected.
Individuals will eventually correct their expectations of the price level. As they do so, prices and
wages will adjust accordingly, shifting the aggregate supply curve to the right (down). For example
if wages are sticky, in light of the lower price level, firms and workers will eventually make bargains
for lower nominal wages. The reduction in wages lowers costs of production, so firms are willing to
Answer:
$360
Explanation:
Interest Expense associated with the loan is the only operating cash flow. We need to calculate the interest expense first
As the note is issued on August 1, year 1, only 5 months has been passed on December 31, year 1, So we calculate the interest expense for only 5 months.
Interest Expense = Value of Note x Stated Interest rate x 5/12 = $10,800 x 8% x 5/12 = $360
It is assumed that the interest is paid on December 31, year 1.
To further sell the car and make it seem more desirable, aswell as to be adding benefits constantly
