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horrorfan [7]
3 years ago
5

Margaret is the manager of a medium-size company. A few years ago, Margaret persuaded the owner to base a part of her compensati

on on the net income of the company. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts. 1. What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet
Business
1 answer:
8090 [49]3 years ago
6 0

Answer:

  • Overstates the Net Income in Income statement
  • Overstates Accounts Receivable in Balance Sheet

Explanation:

The estimate for doubtful debt serves a very important role in accounting because it ensures that a company is ready for the possibility of bad debt occurring. Without it, a company would have to deal with bad debts as they come and this can damage profit projections.

It is treated as an expense in the business so in reducing it, Margaret is reducing the expenses which will increase the net income. This net income will be overstated however because the estimate for doubtful accounts should be higher than it is.

Estimates for doubtful debt are deducted from the Accounts Receivable balance in the Balance sheet so if it is reduced, the Accounts Receivable balance will not be reduced as much as it should be which would mean that is is overstated or higher than it should be.

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As a person becomes more educated, the person may gain more money while working or applying to jobs and will gain more knowledge of their surroundings.
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For many years you have been using your local, small-town bank. One day you hear that the bank is about to be purchased by Bank
kari74 [83]

Answer:

If I was banking with my local town bank and it happens that Bank of Africa purchases it, there are cost and benefits associated with the merge. First, Bank of America is global, meaning that I will be able to access the Services such as ATM services at different points. Second, due to its area of coverage, the services are cheaper compared to the ones I got when it was in my local town. However, due to the monopoly of the bank, they might increase the charges making them more expensive than when the services in the local village. Additionally, it will be a challenge for average customers, such as farmers, to access big banks unless faithful people accompany them.

Explanation:

7 0
3 years ago
Two weeks before his performance appraisal, John successfully resolved a service complaint involving one of the company’s most i
Sergeu [11.5K]

Answer:

The correct answer is Recency error.

Explanation:

Focus on the most recent performance evaluated: The evaluators can be guided by the most recent actions and / or attitudes, whether negative or positive, without considering the history of the collaborators. This error can give an unfair result and nothing representative.

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5 0
3 years ago
Lisa Company uses the periodic inventory system and had 100 units in beginning inventory at a total cost of $10,000. The company
skelet666 [1.2K]

Answer:

FIFO $10,400

LIFO $8,000

AVERAGE COST $9,600

Explanation:

Lisa Company

(1) FIFO

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

Units sold during the period = 220

Cost of units sold

=100*$100+120*130=$25,600

Value of ending inventory

=10,000+26,000-25,600

=$10,400

(2) LIFO

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

Units sold during the period = 220

Cost of units sold

=20*$100+200*130=$28,000

Value of ending inventory

=10,000+26,000-28,000

=$8,000

(3) average-cost

Purchases during the period:

100 units at $100 = $10,000

200 units at $130 = $26,000

average cost per unit

=(10,000+26,000)/300

=$120 per unit

Units sold during the period = 220

Cost of units sold

=220 * $120

=$26,400

Value of ending inventory

=36,000-26,400

=$9,600

8 0
3 years ago
A company uses the weighted average method for inventory costing. At the beginning of a period the production department had 20,
DanielleElmas [232]

Answer:

181,500 units

Explanation:

Given that

Beginning work in progress inventory = 20,000 units

The department completed and transferred = 165,000 units

Ending period = 22,000 units

Percentage of completion = 75%

The computation of equivalent units is given below :-

Work in progress of ending period

= 22,000 × 75%

= 16,500 units

So, the equivalent units

= 165,000 + 16,500

= 181,500 units

6 0
3 years ago
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