Answer:
8. First-In, First-Out (FIFO) - a.
7. Disclosure Principle - b
1. Specific Identification - c
6. Weighted-Average - d
4. Conservatism - e
3. Last-In, First-Out (LIFO) - f
5. Consistency Principle - g
2. Materiality Concept - h
Explanation:
FIFO is a sale technique which provides the oldest stoke of goods as the first sales batch, while LIFO brings the last inventory first.
The materiality concept is a situation where the financial information of a company is said to be material from observing the preparation of the financial statements if it can change the opinion of a reasonable person.
The consistency principle states that once an accounting principle is adopted, it can never be changed. Disclosure principle states that company report must be given to outsiders for knowledgeable decision.
Answer:
a)Decrease, No Change, Decrease
b) -Correct Answer is Option 'B' $ 403,900
--Workings
Accounts receivables, gross $475,000
Less:
Allowance account unadjusted balance $30,600
Bad Debt Expenses [2700000 x 1.5%] $40,500
Adjusted balance of Allowance account $71,100
Net Realizable value of Accounts receivables [475000 - 71100] $403,900
Answer:
a. Decrease
b. Decline
c. Exit
d. No change
Explanation:
The market for gourmet chocolate is in the long-run equilibrium, and an economic downturn has caused the consumer disposable income to fall. Chocolate is a normal good, and the chocolate producers have identical cost structures.
a. This decline in the consumer income will reduce the purchasing power of the consumers. As a result, the demand will decrease. The demand curve will move to the left.
b. This leftward shift in the demand curve will cause the price to decline, As the price falls, the profits earned by the producers will decline as well.
c. In the long run, the firms operate at zero economic profits. So a decline in profits imply that the firms are operating at an economic loss. This will cause the loss incurring firms to exit the market.
d. The long run supply curve will remain the same. It is not affected by change in profits, it changes only with change in the state of technology or availability of resources.
Answer:
Option (3) is correct.
Explanation:
Given that,
cost of purchasing Tetter Company's 12% bonds = $50,000
Accrued interest expense = $2,000
The journal entry is as follows:
On April 1,
Investments in debt securities - Tetter Company bonds A/c Dr. $50,000
Interest receivable A/c Dr. $2,000
To Cash $52,000
(To record the purchase of the bonds)
Answer:
$230,000
Explanation:
Given that,
Days sales outstanding, DSO = 23 days
Annual sales = $3,650,000
Assume that it uses a 365 day year
Accounts receivable = (Annual sales × Days sales outstanding) ÷ 365 days
= ($3,650,000 × 23) ÷ 365 days
= $83,950,000 ÷ 365 days
= $230,000
Therefore, the Baxley Brothers has $230,000 balance in its accounts receivable.