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Debora [2.8K]
3 years ago
15

Adam elects the accrual method of accounting for his business.

Business
1 answer:
In-s [12.5K]3 years ago
8 0

Answer:

The accrual method is an accounting concept which says income and expense shall be recognized in the Accounting period they occurred and not necessarily when cash was received or paid for them.

Therefore, if I sell a piece of item in this year on credit, even when at year end the payment is still outstanding. Accrual concept expects me to recognize a sales. The same applies to expenses, even when payment haven't been made, a provision should be made for liability while the expense is recognized in the income statement.

A. In Oct year 0 Adam agrees to a liability of $3,550 although payment shall be paid in January Year 1.

Based on Accrual concept. Adam will recognize product returns (deduction in sales) in Year Zero and because he hasn't paid cash as at year end, he will also state his liability in the current liability of his balance sheet

B. Adams paid $960 for a 1 year contract for office cleaning.

Although cash has left the business, only a forth of this payment is due in this financial year. Thus Adams will recognize an expense of $240 in Year 0 and post in his Prepaid Expense account (Current Asset of the Balance sheet) an Asset of $720 owed him by the cleaning agency

C. $465 was levied Adam as annual property taxes because of his delivery van.

Although Adam considers immaterial, and he didn't make a payment until Year 1; the rules of Accrual concept won't be discarded.

In year zero he will recognize the $465 has an expense in his income statement because it is applicable to year zero; but because he differed payment to Year 1 he also must recognize a liability to the state for the amount due in his current liability side of the Balance sheet.

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He must have a skratta du flörlar du in his album cover

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Castelda company issues zero coupon bonds which mature in 30 years. These bonds can be bought for $999.38 and then pay no annual
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Answer:

16.59%

Explanation:

We are given the present value of the bonds, their future value and the time, we need to calculate the rate:

FV = PV (1 + rate)ⁿ

  • FV = 100,000
  • PV = 999.38
  • n = 30

100,000 = 999.38 (1 + rate)³⁰

(1 + rate)³⁰ = 100,000 / 999.38 = 100.062

1 + rate = ³⁰√100.062 = 1.1659

rate = 1.1659 - 1 = 0.1659 or 16.59%

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3 years ago
Marin's Cleaning Supplies Company has an idea for a cleaner that is universal and can clean any surface type. This could simplif
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Answer:

Test marketing.

Explanation:

Test marketing is an experimental tool used by manufacturers to test the viability of their products under typical market conditions, comprised of stores and real life buying situations, in order to determine its sales performance and ascertain its acceptability by consumers.

Hence, Marin's Cleaning Supplies Company when doing business analysis should consider test marketing strategy when deciding whether to develop the cleaner.

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1) The Pet Company has recently discovered a type of rock which, when crushed, is extremely absorbent. It is expected that the f
Olenka [21]

Answer:The Pet Company has recently discovered a type of rock which, when crushed, is extremely absorbent. It is expected that the firm will experience (beginning now) an unusually high growth rate (20%) during the period (3 years) when it has exclusive rights to the property where this rock can be found. However, beginning with the fourth year the firm's competition will have access to the material, and from that time on the firm will assume a normal growth rate of 8% annually. During the rapid growth period, the firm's dividend payout ratio will be relatively low (20%), to conserve funds for reinvestment. However, the decrease in growth will be accompanied by an increase in dividend payout to 50%. Last year's earnings were $2.00 per share (E0) and the firm's cost of equity is 10%. What should be the current price of the common stock?

Explanation:

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An airline is considering a project of replacement and upgrading of machinery that would improve efficiency. The new machinery c
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Answer:

$172.25

Explanation:

initial outlay for the project = -$350

cash flow years 1-5 = [($300 - $135 - $70) x (1 - 36%)] + $70 (depreciation expense) = $60.80 + $70 = $130.80

using an excel spreadsheet and the NPV function, we can calculate the project's NPV with an 8% discount rate:

=NPV(8%,130.80,130.80,130.80,130.80,130.80) - $350 = $522.25 - $350 = $172.25

we can also do it manually:

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6 0
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