Cullumber Corporation has announced that its net income for the year ended June 30, 2017, was $1,353,412. The company had EBITDA of $4,948,000, and its depreciation and amortization expense was equal to $1,128,000. The company's average tax rate is 34 percent. What was its interest expense

Answers

Answer 1

Answer:

See below

Explanation:

Net income = $1,353,412

Tax rate is 34% hence the company's EBT amount is calculated as

EBT = $1,353,412 / 0.66 = $2,050,624.24

Add back Depreciation and amortization to the EBT

= $2,050,624.24 + $1,128,000

= $3,178,624.24

The difference between the above and EBITDA amount will be the interest expense for the year

= $4,948,000 - $3,178,624.24

= $1,769,375.76

Therefore, the interest expense is $1,769,375.76


Related Questions

Your dream is about to come true! You are about to buy your first classic sports car. To do so, you have arranged to borrow $65,000 from your local credit union. The interest rate on the loan is 6.00%. To simplify the calculations, assume that you will repay your loan over the next four years by making annual payments at the end of each year. According to the loan officer at the credit union, you must answer the following questions before you can go pick up your new car.

a. How much is the annual payment on your new car loan?
b. How much of your Year 2 payment will constitute interest on your loan?
c. How much of your Year 3 payment will be used to repay principal on the loan?
d. How much will you pay in total interest to finance the purchase of your $65,000 car?

Answers

Answer:

Car Loan

a. The annual payment on the new car loan = $18,758.45.

b. Year 2 payment that is interest on the loan = $3,008.49.

c. Year 3 payment that is principal repayment = $16,694.95

d. The total interest to be paid to finance the purchase of the $65,000 car is:

= $10,033.79.

Explanation:

Data and Calculations:

Loan Amount  65000

Loan Term  4  years 0  months

Interest Rate  6

Compound  Annually (APY)

Pay Back  Every Year

 

Results:

Payment Every Year   $18,758.45

Total of 4 Payments   $75,033.79

Total Interest   $10,033.79

Principal 87%  

Interest 13%

Amortization Schedule

  Beginning Balance        Interest           Principal      Ending Balance

1             $65,000.00           $3,900.00      $14,858.45           $50,141.55

2              $50,141.55           $3,008.49     $15,749.95           $34,391.60

3             $34,391.60           $2,063.50     $16,694.95           $17,696.65

4             $17,696.65            $1,061.80      $17,696.65           -$0.00

Link Co. purchased machinery that cost $3,000,000 on January 4, 2019. The entire cost was recorded as an expense. The machinery has a nine-year life and a $200,000 residual value. The error was discovered on December 20, 2021. Before the correction was made, and before the books were closed on December 31, 2018, retained earnings was understated by:__________

a. $3,000,000.
b. $2,066,667.
c. $2,377,778
d. $2,333,333.

Answers

Answer:

See below

Explanation:

North Pole Fishing Equipment Corporation and South Pole Fishing Equipment Corporation would have identical equity betas of 1.10 if both were all equity financed. The market value information for each company is shown here: North Pole South PoleDebt $ 2,900,000 $ 3,800,000 Equity $ 3,800,000 $ 2,900,000 The expected return on the market portfolio is 10.9 percent, and the risk-free rate is 3.2 percent. Both companies are subject to a corporate tax rate of 35 percent. Assume the beta of debt is zero.a. What is the equity beta of each of the two companies? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Equity betaNorth Pole South Pole b. What is the required rate of return on each of the two companies’ equity? (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16))Rate of returnNorth Pole % South Pole %

Answers

Answer and Explanation:

The calculation is given below;

For North Pole:

Unlevered Beta = 1.10

Debt = $2,900,000

Equity = $3,800,000

So,  

D/E Ratio = Debt ÷ Equity

=  $2,900,000 ÷ $3,800,000

= 0.76316

Now

Levered Beta = Unlevered Beta × [1 + (1 - tax) × D ÷ E Ratio]

= 1.10 ×  [1 + (1 - 0.35) × 0.76316]

= 1.65

Required Return = Risk-free Rate + Levered Beta × (Market Return - Risk-free Rate)

= 3.20% + 1.65 × (10.90% - 3.20%)

= 15.91%

For South Pole:

Unlevered Beta = 1.10

Debt = $3,800,000

Equity = $2,900,000

So,

D/E Ratio = Debt ÷ Equity

= $3,800,000 ÷ $2,900,000

= 1.31034

Now

Levered Beta = Unlevered Beta × [1 + (1 - tax) × D ÷ E Ratio]

=  1.10 × [1 + (1 - 0.35) × 1.31034]

= 2.04

And

Required Return = Risk-free Rate + Levered Beta × (Market Return - Risk-free Rate)

= 3.20% + 2.04 × (10.90% - 3.20%)

= 18.91%

Allen buys only beer and pizza. When the price of beer is $2.00 per bottle and the price of pizza is $10.00, Allen maximizes his total utility (satisfaction) by buying 5 beers and 4 pizzas. If the marginal utility of the 5th beer is 100 utils. What would be the marginal utility of the 4th pizza?

Answers

Answer:

500 utils.

Explanation:

Calculation to determine What would be the marginal utility of the 4th pizza

First step is to determine the Total utility maximized

Using this formula

Total utility maximized =Beer Marginal Utility/Price of beers =Pizza Marginal Utility/Price of pizza.

Let plug in the formula

Total utility maximized= 100 utils/$2.00 = Marginal Utility of pizza/$10.00.

Marginal Utility of beers = 100/$2

Marginal Utility of beers= 50 utils per dollar

Marginal Utility of pizza =50 utils per dollar

Now let determine the marginal utility of the 4th pizza

Hence,

50 = Marginal Utility of pizza/$10

Marginal Utility of pizza=50*$10

Marginal Utility of pizza= 500 utils.

Therefore What would be the marginal utility of the 4th pizza is 500 utils

To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years, you would use which type of time value of money calculation

Answers

Answer:

D)The present value of annuity

Explanation:

These are the options for the question

a) future value of a single amount.b. Contingent assets, if probable and estimable, are The present value of a single amount.c. The future value of an annuity

d. The present value of annuity

The present value of an annuity can be regarded as the amount of money which would be needed today inorder to fund series annuity payments in the future. With respect to time value of money, particular sum of money that is been received today usually have worth that is more than that same sum of money at a future date. For instance, To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or receive an equal amount over a period of years, you would use present value of annuity type of time value of money calculation.

Menning Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed out to cost of goods sold at the end of the month. The company has provided the following data for June:

Direct materials $78,750
Direct labor cost $94,000
Manufacturing overhead cost incurred $61,275
Manufacturing overhead cost applied $65,800

Inventories: Beginning Ending
Work in process $17,500 $19,850
Finished goods $61,500 $38,250

The cost of goods sold that appears on the income statement for August and that has been adjusted for any underapplied or overapplied overhead is closest to: __________

a. $254,925
b. $263,975
c. $236,200
d. $259,450

Answers

Answer:

Adjusted COGS= $254,925

Explanation:

First, we need to calculate the cost of goods manufactured:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 17,500 + 78,750 + 94,000 + 65,800 - 19,850

cost of goods manufactured= $236,200

Now, the COGS:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 61,500 + 236,200 - 38,250

COGS= $259,450

Finally, the over/under applied overhead and the adjustment:

Under/over applied overhead= real overhead - allocated overhead

Under/over applied overhead= 61,275 - 65,800

Overapplied overhead= $4,525

As overhead was overapplied, COGS must be reduced:

Adjusted COGS= 259,450 - 4,525

Adjusted COGS= $254,925

In a pull manufacturing system, ______. Group of answer choices Production is based on government regulations Production is based on capacity of the manufacturer Production is based on actual customer demand Production is based on past trends only

Answers

Answer:

actual customer demand

Explanation:

Pull production systems can be regarded as system whereby the product is been manufactured as a result of response to a specific demand. pull system can be regarded as lean manufacturing strategy , this strategy helps in reduction of waste in the production process. The components that is been used in manufacturing process are been only replaced only when consumed , so in this case, enough products are been made by companies only to meet customer demand. It should be noted that In a pull manufacturing system, Production is based on actual customer demand

The journal entry a company uses to record fully funded pension rights for its salaried employees at the end of the year is
a. debit Pension Expense; credit Unfunded Pension Liability and Cash.
b. debit Pension Expense; credit Unfunded Pension Liability.
c. debit Pension Expense; credit Cash.
d. debit Salary Expense; credit Cash.

Answers

Answer:

The answer is C.

Explanation:

The correct option to the question is C.

Debit pension expense and credit cash.

Because the pension expense account is increasing, we debit. Increase in expense goes to the debit side.

And because cash is reducing by paying out pension expense from there, we credit the cash account. Decrease in asset(like cash) goes to the credit side.

Twinkies on the shelf of a convenience store lose their fresh tastiness over time. We say that the taste quality is 11 when the Twinkies are first put on the shelf at the store, and that the quality of tastiness declines according to the function Q(t)=.85tQ(t)=.85t (tt in days). Determine when the taste quality will be one half of its original value.

Answers

Answer:

4.27 days

Explanation:

Initial taste quality = 1

Quality of tastiness declines using this function

Q(t)  = 0.85^t ( t in days )

Determine when the taste quality will be 1/2 of original value

i.e. when Q(t) = 1/2

1/2 = 0.85^t

= In ( 2 ) = - t ( In 0.85 )

∴ t = - In (2) / In (0.85)

     = 4.265 days  ≈ 4.27 days

Commercial Services.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales $3,000,000
Net operating income $150,000
Average operating assets $750,000
Required:
Consider each question below independently. Carry out all computations to two decimal places.
1. Compute the company’s return on investment (ROI).
2. The entrepreneur who founded the company is convinced that sales will increase next year by 50% and that net operating income will increase by 200%, with no increase in average operating assets. What would be the company's ROI?
3. The chief financial officer of the company believes a more realistic scenario would be a $1,000,000 increase in sales, requiring a $250.000 increase in average operating assets, with a resulting $200,000 increase in net operating income. What would be the company’s ROI in this scenario?

Answers

Answer:

1. ROI = Margin * Turnover

Margin = Net operating income / Sales

= 150,000 / 3,000,000

= 5%

Turnover = Sales / Average operating assets

= 3,000,000 / 750,000

= 4 times

ROI = 5% * 4

= 20%

2. Sales will increase by 50% and NOI will increase by 200%.

Margin = (150,000 * (1 + 200%)) / (3,000,000 * ( 1 + 50%))

= 10%

Turnover = (3,000,000 * ( 1 + 50%)) / 750,000

= 6

ROI = 10% * 6

= 60%

3. Sales will increase by $1,000,000. Average operating assets by $250,000 and NOI will increase by $200,000

Margin = (150,000 + 200,000) / (3,000,000 + 1,000,000)

= 8.75%

Turnover = (3,000,000 + 1,000,000) / (750,000 + 250,000)

= 4

ROI = 8.75% * 4

= 35%

The Maybe Pay Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 5.8 percent, how much will you pay for the policy

Answers

Answer:

the amount that should be paid for the policy is $431,034.48

Explanation:

The computation of the amount that should be paid for the policy is given below:

Present value of perpetual cash flow = Perpetual cash flow ÷ Rate of return

= $25,000 ÷ 5.8%

= $431,034.48

Hence, the amount that should be paid for the policy is $431,034.48

The same should be considered and relevant

The May transactions of Bramble Corp. were as follows:

May 4 Paid $610 due for supplies previously purchased on account.
7 Performed advisory services on account for $6,840.
8 Purchased supplies for $870 on account.
9 Purchased equipment for $1,930 in cash.
17 Paid employees $700 in cash.
22 Received bill for equipment repairs of $800.
29 Paid $1,280 for 12 months of insurance policy. Coverage begins June 1.

Required:
Journalize the transactions.

Answers

Answer and Explanation:

The journal entries are given below:

On May 4

Account  payable $610

        To cash $610

(To record the cash paid)

On May 7

Account  receivable $6,840  

       To service revenue $6,840

(To record the service on account)

On May 8

Supplies $870    

      To Account payable $870  

(To record supplies purchased on account)

On May 9

Equipment $1,930  

        To cash $1,930

(To record the equipment purchase)

On May 17

Salary expense $700

         To cash $700

(To record the salaries expense)  

On May 22

Repair expense $800  

        To Account payable $800

(To record the received bill for repairing of an equipment)

On May 29

Prepaid rent $1,280

         To cash  $1,280

(To record the cash paid)

You are a farmer who is putting away bales of hay for the winter months. Each bale is 3 feet long, 2 feet wide, and 1.5
feet thick. The bales of hay are stacked in storage bins 12 feet long, 8 feet wide, and 6 feet deep.
What is the minimum number of bins needed for 350 bales of hay?

Answers

Answer: 5.46 bins would be needed, so 6 bins for 350 bales of hay.

Explanation:              Bales                  350 bales have 9³ft each            L=3×W=2×H=1.5 totals 3150³ft                                     Bins                         L 12ft × W 8ft × H 6ft                              have 546³ft each                       3150³ft ÷ 546³ft = 5.46875you can't buy half a bin, you would need 6 bins

The mean of a set of data is 5.07 and its standard deviation is 3.39.
Find the z-score for a value of 9.65.

Answers

Answer:

1.35

Explanation:

zscore= (x-mean)/(Standard deviation)

(9.65-5.07)/3.39= 1.35

Demand for a product is 500 units per month. The company incurs a fixed order placement, transportation, and receiving cost of 4,000 each time an order is placed. Each cycle costs 500 and the retailer has a holding cost of 20 percent. Evaluate the number of products that the store manager should order in each replenishment lot?

Answers

Answer:

Economic Order Quantity is the level of inventory that minimizes the total inventory holding costs and ordering costs. It is one of the oldest classical production scheduling models. Economic order quantity refers to that number (quantity) ordered in a single purchase so that the accumulated costs of ordering and carrying costs are at the minimum level. In other words, the quantity that is ordered at one time should be so, which will minimize the total of. Cost of placing orders and receiving the goods, and Cost of storing the goods as well as interest on the capital invested.

economic order quantity (EOQ)

Renegade Publishers Inc. projected sales of 29,000 diaries for 2016. The estimated January 1, 2016, inventory is 1,200 units, and the desired December 31, 2016, inventory is 3,000 units. What is the budgeted production (in units) for 2016

Answers

Answer:

30,800 units

Explanation:

Production Budget for 2016

Budgeted Sales                                     29,000

Add Budgeted Closing Inventory           3,000

Total                                                       32,000

Less Budgeted Opening Inventory       (1,200)

Budgeted Production                            30,800

therefore,

The budgeted production (in units) for 2016 is 30,800 units

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:
Activity Activity Rate
Hair washing $4.00
Conditioning $3.50
Chemical treatment $25.00
Styling $10.00
​Hair Washing
Conditioning Chemical Treatment
Styling
Haircut 1 1 0 0
Complete style 1 1 0 1
Perm 2 3 1 1
Highlights 3 4 2 1
​Calculate the cost of services for a haircut.
a. $7.50
b. $4.00
c. $3.50
d. $11.50

Answers

Answer:

The correct option is a. $7.50.

Explanation:

Note: The data in this question are merged together. They are therefore sorted before answering the question. See the attached pdf file for the complete question with the sorted data.

The explanation of the answer is now provided as follows:

Activity-based costing is a costing system that involves identifying an organization's activities and assigning the cost of each activity to all products and services based on actual consumption.

Based on the data in the question, a haircut requires ​one units each of Hair Washing and Conditioning, while it requires zero unit of each of Chemical Treatment and Styling.

Therefore, we have:

Cost of services for a haircut = (Units of Hair Washing * Rate of Hair Washing) + (Units of Conditioning * Rate of Conditioning) = (1 * $4.00) + (1  $3.50) = $4.00 + $3.50 = $7.50

Therefore, the correct option is a. $7.50.

The data is D = 50,000/year, S= $500 per order, H = $0.25 per unit per year. Assume a lead time of 3 days.

Fill in the following table. Write out the formulas you are using.

Annual demand
Holding cost (units per year)
Ordering cost
Ordering quantity (EOQ)
Number of orders per year
Average inventory
Maximum inventory
Reorder level
Length of order cycle
Annual holding cost
Annual ordering cost
Annual Affected Inventory Cost

b. Suppose a mistake was made in the data and the correct data is D = 60,000 per year, S = $400 per order, H = $0.20 per unit per year. Calculate the correct EOQ and affected inventory cost.
c. Now suppose we used the incorrect EOQ (based on the first set of data) instead of the correct EOQ. Calculate the affected inventory cost.
d. Compute the percentage error in the EOQ and in the inventory cost.
e. Moral of the story is that incorrect estimation of costs or demand (does or does not) result in substantial deviation from the optimal cost (circle the right answer).

Answers

Answer:

Annual demand 50,000 units

Holding cost $0.25 per year

Ordering Cost $500 per order

EOQ : 14,142

Number of orders per year 4

Average inventory 14,142 units

Maximum inventory 14,500 units

Reorder level 410 units

Length of order cycle 3 days

Annual Holding cost $12,500

Annual ordering cost $2000

Annual affected inventory cost $14,500

Explanation:

EOQ = [tex]\sqrt{\frac{2 * D * S}{H} }[/tex]

EOQ = [tex]\sqrt{\frac{2 * 50000 * 500}{0.25} }[/tex]

EOQ = 14,142 units

Number of Order : Annual demand / EOQ

Number of order : 50,000 / 14,142 = 3.53 or approximately 4

Annual Ordering cost : No. of order * cost per order

Annual ordering cost : 4 * $500 = $2,000

Annual Holding Cost : Demand * Holding cost per unit

Annual holding cost = 50,000 * $0.25 per unit = $12,500

Reorder level : Daily demand * lead time

Reorder level : [ 50000 / 365 ] * 3 = 410 units

The purpose of GAAP's flexibility in its reporting standards allows companies to: Select one: a. Smooth reported revenues and earnings over several reporting periods. b. Change accounting estimates to meet target sales or earnings. c. Change accounting principles to improve reported earnings. d. Adopt specific accounting and reporting procedures to represent the firm's activities more accurately.

Answers

Answer:

D. Adopt specific accounting and reporting procedures to represent the firm's activities more accurately.

Explanation:

GAAP in accounting means Generally accepted accounting principle. It is a uniform collection of accounting rules and standards for reporting financial accounting for organizations

The main reason or purpose of GAAP is to ensure that there is transparency and consistency in the reporting of financial details from one organization to another. The aim is to also help firms record their financial activities accurately by adopting specific accounting and reporting procedures as stipulated by GAAP.

Which statement is true?
A bank interest lower than inflation means more purchasing power.
Nominal rates are an accurate figure of purchasing power.
Real interest measures the power of the saved money
Real interest is the rate quoted in loan and deposit agreements.

Answers

Answer:

Nominal rates are an accurate figure of purchasing power.

The statement nominal rates are an accurate figure of purchasing power can be marked as true. Thus, the correct option is B). Nominal rates are an accurate figure of purchasing power.

What is nominal interest rate?

Nominal interest rate refers to the interest rate before taking inflation into account. It is also refer to the interest rate on a loan that is charged without taking into account any fees or compounding of interest.

The nominal rate of interest is often used in banks to describe the interest on different loans and in the investment field as well. The higher the nominal rate, the more interest will be earned on savings.

Basically, the nominal interest rate is approximately equal to the real interest rate plus the inflation rate that can be depicts as (i = R + h).

Learn more about nominal interest rate here:-

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Mertis, Inc. reported Net fixed assets as follows on its Balance sheets for December 31, 2011, and December 31, 2012 look as follows:
2011 2012
Net fixed assets 815,000 865,000
On its 2012 Income statement, Mertis recorded a depreciation expense of $34,971. What amount of cash did Mertis spend in 2012 on new fixed assets? (Record your answer without a dollar sign and without commas, for example, a record $32,400 as 32400).

Answers

Answer:

the amount of cash did Mertis spend in 2012 on new fixed assets is $84,971

Explanation:

The computation of the amount of cash did Mertis spend in 2012 on new fixed assets is shown below;

= ending net fixed assets + depreciation expense - beginning net fixed assets

= $865,000 + $34,971 - $815,000

= $84,971

Hence, the amount of cash did Mertis spend in 2012 on new fixed assets is $84,971

_______ is best described as the process of transformation of an idea into a new product or process, or the modification and recombination of existing ones.

Answers

Answer: Invention

Explanation:

Invention simply refers to the process for transforming an idea into a new product or the modification and the recombination of existing ones.

Invention is the unique method, or process that's used in the creation of a product or may be an improvement on a product or machine that's already created.

Currency $1,000 Checking Account Balances $2,000 Savings Account Balances $5,000 Small-Denomination Time Deposits $6,000 Non-Institutional Money Market Fund Shares $7,000 Consider the information above from 2019 and assume there are no traveler's checks. Calculate M1.

Answers

Answer:

M1 = $3000

Explanation:

Below is the given values:

Given the currency = $1000

The balance of checking account = $2000

In order to find the M1, just add the balances of currency and balances of the checking account.

Thus M1 = Currency + Balance of checking account

M1 = 1000 + 2000

M1 = 3000

Therefore, the M1 = $3000

The MC = P rule applies
Select one
A. Only when the firm is a price taker or perfectly competitive firm
B. To firms in all type of industries
C. Only to monopolies
D. Only to monopolistic competition

Answers

the answer is d you’re welcome

John works for a media advertising company that helps clients place ads in local online newspapers and magazines. He consults with systems analysts and programmers on projects that require the creation of systems to manage client records and trends. What is John's role in his organization?

Answers

Answer:

Database Administrator

Explanation:

From the question we are informed about John who works for a media advertising company that helps clients place ads in local online newspapers and magazines. He consults with systems analysts and programmers on projects that require the creation of systems to manage client records and trends. In this case, John's role in his organization is Database Administrator.

Database administrators can be regarded as a professionals that carry out functions that involve database development, security as well as storage and retrieval. They are professional that handle database management systems software, they are responsible for determining ways that can be used to organize and store data. Their role can carry such as capacity planning,performance monitoring as well as installation and configuration also troubleshooting and database design,

Which business unit could have its shares quoted on the stock exchange?​

Answers

Answer:

To promote trading of its stock, a corporation may choose to list its shares on a stock exchange. Apple, Walmart and Ford are high-profile publicly traded corporations, but smaller companies also trade on the major exchanges.

In some very small countries, ConveyerPape recognizes that the cost of navigating the legal system and establishing a distribution channel is more than the potential profit. Still, ConveyerPape would like to provide conveyer belts to some established customers operating in the country. ConveyerPape should consider utilizing a:________

Answers

Answer:

Distribution intermediary

Explanation:

In simple words, Producers can contact different sorts of clients through intermediaries in a distribution chain. Intermediaries function as go-betweens for distinct parts of the supply chain, purchasing from one and delivering to another.

In other words, A delivery route is a series of firms or middlemen throughout which an item or service is purchased by the end buyer.

On December 31, the company provides consulting services and bills its customer $3,000 for these services.

Required:
Write down the necessary journal entry.

Answers

Answer:

Debit Accounts receivable $3,000

Credit Consulting Revenue $3,000

Explanation:

Based on the information given if the company provides consulting services and bills its customer the amount of $3,000 for these services the appropriate journal entry On December 31 will be:

On December 31

Debit Accounts receivable $3,000

Credit Consulting Revenue $3,000

The journal entry for recording the consulting services is given below:

On December 31

Accounts Receivable $3,000  

         To Consulting Revenue $3,000

(Being consulting services is recorded)

Here the account receivable should be recorded as it increased the assets and credited the consulting revenue as it also increased the revenue.

Therefore we can conclude that the above journal entry should be recorded.

Learn more about the journal entry here: brainly.com/question/20421012

Politicalization of Accounting Standards
Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Think about the term more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles (FASB) are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).
Required:
a. The Committee on Accounting Procedure of the AICPA was established in the mid to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed, and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicalization (as the term is used in the broad sense) of accounting standard setting? Explain.
b. What arguments can be raised to support the politicalization of accounting standard setting?
c. What arguments can be raised against the politicalization of accounting standard setting?

Answers

Answer: Some accountants have said that politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, particularly the Securities and Exchange Commission, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).

Instructions

(a) The Committee on Accounting Procedure of the AICPA was established in the mid- to late 1930s

and functioned until 1959, at which time the Accounting Principles Board came into existence. In

1973, the Financial Accounting Standards Board was formed and the APB went out of existence.

Do the reasons these groups were formed, their methods of operation while in existence, and the

reasons for the demise of the first two indicate an increasing politicization (as the term is used in

the broad sense) of accounting standard-setting? Explain your answer by indicating how the CAP,

the APB, and the FASB operated or operate. Cite specific developments that tend to support your

answer.

(b) What arguments can be raised to support the “politicization” of accounting rule-making?

(c) What arguments can be raised against the “politicization” of accounting rule-making?

Solution

a) CAP. The Committee on Accounting Procedure, CAP, which was in existence from 1939 to 1959, was a natural outgrowth of AICPA committees which were in existence during the period 1933 to 1938. The committee was formed in direct response to the criticism received by the accounting profession during the financial crisis of 1929 and the years thereafter. The authorization to issue pronouncements on matters of accounting principles and procedures was based on the belief that the AICPA had the responsibility to establish practices that would become generally accepted by the profession and by corporate management.

Explanation:

Melhoyo Corporation, a manufacturing company, has provided data concerning its operations for September. The beginning balance in the raw materials account was $37,000 and the ending balance was $29,000. Raw materials purchases during the month totaled $57,000. Manufacturing overhead cost incurred during the month was $102,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for September was: Group of answer choices

Answers

Answer:

The correct answer is "$63,000".

Explanation:

Given:

Beginning balance of raw materials,

= $37,000

Purchases made,

= $57,000

Ending balance,

= $29,000

Expenses of raw material,

= $2,000

Now,

The direct material cost will be:

= [tex]Beginning \ balance+Purchases \ made-Ending \ balance-Expenses \ of \ raw \ material[/tex]= [tex]37000+57000-29000-2000[/tex]

= [tex]63,000[/tex] ($)

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