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3 years ago

According to liquidity preference theory, money supply and money demand are balanced by adjustments of

Business

1 answer:

givi [52]3 years ago

5 0

Answer:

Nominal Interest rate

Explanation:

According to liquidity preference theory, money supply and money demand are balanced by adjustments of Nominal Interest rate. Suppose you have some money, you will decide to either keep it in cash or in the bank. If you keep the money in cash, the opportunity cost of keeping in cash is the interest rate earned if you would have kept the money in the bank. Bank offers the nominal interest rates and not the real interest rates. Bank rates are not adjusted for inflation. So if the interest rate on money increases the opportunity cost of holding money in cash increases. If money supply in the economy increases the demand for money will increase only by reducing the interest rate because then only people fir hold cash and demand higher money. So, money supply and money demand are balanced by adjustments of the Nominal Interest rate.

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The use of the lower of cost or net realizable value (LCNRV) method to value inventory for reporting purposes is a departure fro

Wewaii [24]

Question:

The use of the lower of cost or net realizable value (LCNRV) method to value inventory for reporting purposes is a departure from the accounting principle of:

A) Historical cost.

B) Matching.

C) Going concern.

D) Conservatism.

Answer:

The Right answer is A) Historical Cost.

Explanation:

Inventories are recorded at their cost. If inventory declines in value below its original cost, a major departure from the historical cost principle occurs.

Whatever the reason for a decline-damage, physical deterioration, obsolesce, changes in price levels, or other causes, a company should write down the inventory to Lower-of-Cost or Net Realizable Value (LCNRV) to report this loss.

A company abandons the historical cost principle when the future utility (revenue-producing ability) of the asset drops below its original cost.

Net Realizable Value refers to the net amount that a company expects to realize from the sale of inventory. Specifically, net realizable value is the estimated selling price in the normal course of business minus estimated costs to make a sale.

Example

Inventory Value - Unfinished $2,000

Less: Estimated Cost of Completion $ 50

Estimated Cost to sell 200 250

Net Realizable Value 750

Cheers!

8 0

3 years ago

Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2020. The lease is for an 8-year perio

Misha Larkins [42]

Answer:

A.$230,410

B. 01-Jan-17

Lease Receivable $230,410

Cost of Goods Sold $160,000

Sales Revenue $230,410

Inventory $160,000

01-Jan-17

Dr Cash $35,004

Cr Lease Receivable $35,004

31-Dec-17

Dr Lease Receivable $11,724

Cr Interest Revenue $11,724

C)01-Jan-17

Dr Cash $35,004

Cr Deposit Liability $35,004

D. Dr Inventory $1,000

Cr Gain on Lease $1,000

Explanation:

A. Computation for the amount of the lease receivable.

PV of lease= PV(rate, nper, pmt, [fv]), [type])

PV of lease= -PV (6%,8,35004, , 1)

PV of lease =$230,410

Therefore the amount of the lease receivable is $230,410

B. Preparation of all necessary journal entries for Crosley for 2020.

01-Jan-17

Lease Receivable $230,410

Cost of Goods Sold $160,000

Sales Revenue $230,410

Inventory $160,000

01-Jan-17

Dr Cash $35,004

Cr Lease Receivable $35,004

31-Dec-17

Dr Lease Receivable $11,724

Cr Interest Revenue $11,724

C. Preparation of all necessary journal entries for the company in 2020.

01-Jan-17

Dr Cash $35,004

Cr Deposit Liability $35,004

D. Preparation to Record the entry to recognize the receipt of the asset for Crosley at the end of the lease term

Dr Inventory $1,000

Cr Gain on Lease $1,000

6 0

3 years ago

Marketing communicators should realize that other communication methods must receive careful consideration before _____ is autom

agasfer [191]

Answer:

Mass Media Advertising

Explanation:

Marketing communication refers to means of marketing the products such as advertising, sales promotion etc. It refers to how the product attributes are conveyed to the prospective customers.

Marketing communicators are the ones who undertake and decide upon marketing communication methods.

Mass media advertising means reaching out to wide masses by means of print media, visual and audio marketing through television, audio marketing through radio.

Mass media advertising involves heavy expenditure and thus before opting for it, the marketing communicators should weigh in or consider other marketing communication modes as well.

5 0

3 years ago

A method of accounting for uncollectible receivables in which the company estimates bad debts expense instead of waiting to see

bazaltina [42]

Answer:

The statement is True as well as correct

Explanation:

Allowance method is the financial term which is defined as the uncollectible accounts receivable procedure that reports the estimate of the bad debt expense in the same accounting or fiscal year as the sale.

Under this method, it is used to adjust the accounts receivable which appears on the balance sheet.

For example,

If the company has the credit sales of $800,000 in December and estimate that the 4% will be uncollectible. Then using this method, computing the uncollectible as:

Bad debt expense = Sales × Estimate uncollectible

= $800,000 × 4%

= $32,000

So, this estimate the bad debt expense rather than wait to see which customer will not able to collect.

5 0

3 years ago

July Networks provides digital television services across the country. They have a cuttingedge technology that provides high-res

Vesna [10]

Answer:

Locking in customers.

Explanation:

July Networks is locking in customers for the next two years by telling them to subscribe with July Networks. This will keep these customers loyal to them for two years, during which they can further implement retention strategies to keep the customers with them more than two years.

This is a good business strategy and customers are attracted to subscribe because of the cutting edge television technology that is being provided by July Networks.

5 0

3 years ago

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