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miv72 [106K]
3 years ago
8

Book Values versus Market Values In preparing a balance sheet, why do you think standard accounting practice focuses on historic

al cost rather than market value
Business
1 answer:
Pachacha [2.7K]3 years ago
6 0

Answer:

Historical costs is objectively and precisely measured, whereas market values can be difficult to estimate, and different analysts would come up with different

values.

Explanation:

In preparing a balance sheet it is customary for a company to value the assets and other items based on historical costs rather than market values.

For example if an asset is purchased at $20,000, this value will reflect in the balance sheet in subsequent years. Or future calculation will be based on this.

Let's say yearly depreciation is $1,000 then after on year the value will be $19,000, after two years $18,000 and so on.

This is more object than market value which varies at any one time.

Market value for an item will vary depending on location and the market.

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Money Market Mutual Find Balances held by Businesses $100 Money Market Mutual Fund Balances held by Individuals 220 Currency in
oksian1 [2.3K]

Answer:

A

Explanation:

M2= 60+70+50+220+80= $480

hence option A is correct

MZM = $480-80+100= $500

4 0
3 years ago
Read 2 more answers
Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of c
anyanavicka [17]

Answer and Explanation:

The classification is as follows

1.

A. financing activity = Cash outflow  as cash is gone

B. Operating activity  = Cash inflow as cash is received

C.  Operating activity  = Cash outflow  as cash is gone

D. Financing activity  = Cash outflow  as cash is gone

E. Investing activity  = Cash outflow  as cash is gone

2.

A. Investing activity  = Cash outflow  as cash is gone

B, Investing activity  = Cash inflow as cash is received

C.  Operating activity  = Cash outflow  as cash is gone

D.  Operating activity  = Cash inflow as cash is received

E.  Operating activity  = Cash inflow as cash is received

F.financing activity  = Cash inflow as cash is received

8 0
3 years ago
When quantifying country risk:
Simora [160]

Answer:

The correct answer is b.weights should be assigned to the political and financial factors according to their perceived importance.

Explanation:

The determination of risk certifications that are taken into account for investment in a country, takes into account fundamental factors that ensure a sustained and less restrictive operation over time, which is directly related to the decisions made by politicians and banks already which are the sectors directly involved in an investment decision. Other important factors are usually located in citizen security, access to ports and airports, etc.

6 0
3 years ago
If merchandise costing $500 is sold on account for $620, how is this transaction recorded when using a perpetual inventory syste
kipiarov [429]

Answer:

Explanation:

Debit Accounts Receivable and credit Sales Revenue for $620;

DEBIT: Cost of Goods Sold CREDIT: Inventory for $500

5 0
2 years ago
Henry Josstick has just started his first accounting course and has prepared the following balance sheet and income statement fo
Brut [27]

Answer:

INCOME STATEMENT

Net sales                                        $710

Cost of goods sold                       ($585)

Selling, gen & admin expenses   ($39 )

Depreciation                                 <u> ($13)  </u>

EBIT                                                 $73

Interest expense                          <u> ($26 )</u>

Taxable income                              $47

Taxes                                            <u> ($16 ) </u>

Net income                                   <u> $31 </u>

Balance Sheet

Property, plant, and equipment  $525

Less accumulated depreciation <u>($121)</u>

Net fixed assets                                          $404

Inventories                                     $51

Cash                                               $16

Receivables                                   <u>$40 </u>

Total current assets                                    <u>$107 </u>

Total Assets                                               <u>$511</u>

Shareholders’ equity                                   $94

Long-term debt                               $355

Payable                                 $36

Debt due for repayment      <u>$26 </u>

Total current liabilities                     <u>$62</u>

Total liabilities                                             <u> $417 </u>

Total liabilities & shareholders’ equity       <u>$511</u>

Explanation:

Sales and Expenses balances are included in Income statement. Assets, Equity and Liabilities balances are included in the balance sheet.

5 0
3 years ago
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