Answer:
a. INCORRECT.
Principle violated : HISTORICAL COST PRINCIPLE
Under GAAP, fixed assets should be recorded at their original cost in the balance sheet. In recording at fair value, Tina Company is in violation of this.
b. CORRECT.
Principle used: MONETARY UNIT ASSUMPTION
Under this principle, transactions should have a monetary value that it can be expressed in in the books so as to ensure that it is measurable.
c. INCORRECT.
Principle violated : SEPERATE ENTITY ASSUPTION
This principle states that the personal transactions of the owner and that of the business should be recorded separately so that the business's financial records can be as accurate as possible.
Answer:
B. $2,500
Explanation:
Given that
Total annual cost = $12,000 + $0.25 per unit
The $12,000 denotes the annual cost, so the monthly cost is
= $12,000 ÷ 12 months
= $1,000
And the number of units is 6,000
Now placing these values to the equation above
= $1,000 + 6,000 units × $0.25 per unit
= $1,000 + $1,500
= $2500
A. The stock market............
Answer:
Option (a) is correct.
Explanation:
U(x1, x2) = x1x2
Income = 100 dollars
Therefore,
Alex budget constraint is $100.
(a) (12.5, 12.5)
Cost of this bundle = 12.5 × $4 + 12.5 × $4
= $50 + $50
= $100
(b) (25, 12.5)
Cost of this bundle = 15 × $4 + 10 × $5 + 12.5 × $4
= $60 + $50 + $50
= $160
This bundle is not possible because of budget constraint.
(c) (12.5, 25)
Cost of this bundle = 12.5 × $4 + 25 × $4
= $50 + $100
= $150
This bundle is not possible because of budget constraint.
(d) (15, 10)
Cost of this bundle = 15 × $4 + 10 × $4
= $60 + $40
= $100
Hence, it is possible to buy bundle (a) and (d).
Utility function for (a) and (d) bundle:
(a) (12.5, 12.5)
Utility = 12.5 × 12.5
= 156.25
(d) (15, 10)
Utility = 15 × 10
= 150
Therefore,
Alex will choose bundle (a) (12.5, 12.5) because this will give maximum utility.