Answer:
A) The GAAP statement is based on cost function rather than cost behavior.
Explanation:
Income statements that follow GAAP rules categorizes expenses based on their business function: product, selling or administrative.
While cost behavior categorizes costs based on how they influence a company's activities: variable, fixed and mixed. When a manager wants to measure the impact of any decision he/she makes, they need to use this type of categorization. For example, if fixed costs increase, what is the new break even point? If variable costs decrease, how is the marginal cost affected?
The Johnson's can't sue the driver in the Federal Court because the Johnson's live in the same state (since the driver lives near the Johnson's in the same time) and the damages ($5,000.00) are too small.
Given:
60-day, 9% note for 10,000
The maturity value is: 10,150
10,000 x 9% x 60/360 = 150 interest
10,000 + 150 = 10,150
The 9% is the annual interest on the note.
60-day is the term of the note.
The note will mature at the end of July or on August 1st.
