Answer:
a. $12.40
Explanation:
EBIT stands for earnings before interest and taxes; therefore, interest and taxes rates should not be considered. The EBIT is determined as the amount from sales deducted by operating costs and depreciation. The EBIT is:
The answer is alternative a. $12.40.
These are the accounting assumption:
- Expense recognition principle: Charges are allocated to revenues at the appropriate time.
- Measurement principle: Changes in fair value that occur after purchase are not reported in the accounting.
- Full disclosure principle: Requires the reporting of all important financial information.
- Going concern assumption: Justification for not reporting plant assets at their liquidation value.
- Economic entity assumption: Recommends that personal and professional records be kept separate.
- Periodicity assumption: Divides financial data into time periods for reporting reasons.
- Monetary unit assumption: reported using the dollar as the "measuring stick," according to the monetary unit assumption.
Accounting assumptions are a set of guidelines that guarantee an organization's business operations are carried out effectively and in accordance with the standards established by the FASB (Financial Accounting Standards Board), laying the foundation for reliable, consistent, and valuable financial reporting.
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Answer:
Following are the solution to the given point.
Explanation:
For question 1:
Economic gains are distinct from bookkeeping gains. Accounting value also takes into account the cost of potential.
that's why "option a" is correct.
For question 2:
The "option d" is correct.
For question 3:
The "option c" is correct.
Answer:
The purchases of raw material for February are budgeted to be 20275 pounds.
Explanation:
The opening inventory of raw material in February should be equal to 25% of the production requirement for the month of February. Thus, the opening balance of raw material is,
Opening balance- Raw material = 0.25 * 20600 = 5150 pounds
Similarly, the closing inventory for raw material for the month of February should be equal to the 25% of production requirement for the month of March. Thus, the closing inventory of raw material in the month of February is,
Closing balance = 0.25 * 19300 = 4825 pounds
Purchases of raw material should be enough to produce enough units to meet February's production requirement after using the opening inventory of raw material along with having enough desired closing inventory of raw material. So, the purchases of raw material are,
Purchases = Closing inventory + Production - Opening Inventory
Purchases = 4825 + 20600 - 5150
Purchases = 20275 pounds
