Answer:
The correct answer is (a) $41,800.
Explanation:
Solution:
Given that:
The first step taken is to calculate for depreciation on sold equipment:
Amount($)
Accumulated depreciation in Year -1 (a) = 540000
Depreciation for the year 2 (b) = 48000
Accumulated depreciation to be in year 2 c=(a+b)=588000
Reported accumulated depreciation in year 2(d)=460000
Thus,
Depreciation on sold Equipment e= (c-d) = 128000
Now,
The second step is to calculate sale proceeds:
Cost (a)= 164000
Depreciation(b) =128000
The written dawn value c=(a-b) = 36000
Gain on sale of equipment (d)=5800
The Sale Price (c+d)=41800
Therefore, the sale of the equipment is $41,800
Murray Plc owns 60% of the equity share capital of Federer Ltd. For the year ended 31 December 20X6 Federer reported profit after tax of pound200,000. During the year Federer had sold goods to Murray Plc for pound60,000 at cost plus 25%. At the year-end 70% of these goods were unsold. What is the profit attributable to the non-controlling interest in the consolidated statement of comprehensive income for the year ended 31 December 20X6?
Answer:
$76,640
Explanation:
The solution of profit attributable to the non-controlling interest is provided below:-
Percentage of equity share capital = 100% - Equity share capital percentage
= 100% - 60%
= 40%
As we know that if profit percentage is 25% on cost so sale percentage is equals to 20%
So,
Profit on sale value = Sale percentage × Sale value
= 20% × $60,000
= $8,400
now,
Total adjust profit = Profit after tax - Unrealized profit on unsold stock
= $200,000 - $8,400
= $191,600
and, after the total adjust profit finally
Profit attributable to the non-controlling interest = Total adjust profit × Percentage of equity share capital
= $191,600 × 40%
= $76,640
Blue Corporation is projecting a cash balance of $36,450 in its December 31, 2016, balance sheet. Blue’s schedule of expected collections from customers for the first quarter of 2017 shows total collections of $224,775. The schedule of expected payments for direct materials for the first quarter of 2017 shows total payments of $52,245. Other information gathered for the first quarter of 2017 is sale of equipment $3,645; direct labor $85,050, manufacturing overhead $42,525, selling and administrative expenses $54,675; and purchase of securities $17,010. Blue wants to maintain a balance of at least $30,375 cash at the end of each quarter.
Prepare a cash budget for the first quarter.
Answer and Explanation:
The Preparation of cash budget for the first quarter is following below:-
Cash Budget
Particulars Amount
Cash balance Beginning $36,450
Add: Receipts
Total Collection $224,775
Sale of equipment $3,645
Total receipts $228,420
Total cash available $265,870
Less: Disbursements
Direct material $52,245
Direct labor $85,050
Manufacturing overhead $42,525
Selling and
administrative overhead $54,675
Purchase of securities $17,010
Total Disbursements $251,535
Available excess available
cash over disbursements $14,335
Financing
Add: Purchase of securities $17,010
Less: Repayments -
Cash balance at ending $31,345
So, to reach at ending balance we simply added the purchase of securities and ending cash balance.
Managers at Trendy Fashions, a large retail chain, experience conflict and organizational politics. The company's customer service ratings suffer, and managers point to other departments as the cause of the problem. The conflicts and politics further contribute to the customer service problems. The CEO of this chain hears about the appreciative inquiry process and thinks this might be a good technique to use to improve this situation. He needs more information on this process.
The CEO needs to know that the first step in his appreciative inquiry change effort will begin with __________.
Answer:
identifying the positive elements of an organization or work unit that is performing well.
Explanation:
The appreciative inquiry process is a metodology to handle change that concentrates on the positive aspects in an organization instead of the negative ones. Also, the process has four steps:
1. Identifying the positive elements of an organization or work unit that is performing well.
2. Dreaming about good possibilities for the company's future and what might provide great results.
3. Designing the perfect strategies to accomplish goals.
4. Delivering conclusions about the other phases and discussing what can be done to to contribute to the company's goals.
According to this, the answer is that the CEO needs to know that the first step in his appreciative inquiry change effort will begin with identifying the positive elements of an organization or work unit that is performing well.
race acquired an activity four years ago. The loss from the activity is $50,000 in the current year (at-risk basis of $40,000 as of the beginning of the year). Without considering the loss from the activity, she has gross income of $140,000. If the activity is a convenience store and Grace is a material participant, what is the effect of the activity on her taxable income? Grace may deduct $ of the $50,000 loss due to the rules. $ is suspended. The available loss subject to the passive activity loss rules because . As a result, Grace's income for tax purposes is $ .
Answer: 12
Explanation:
42
Answer:
Grace taxable income during the year = $100,000
Given:
Current year loss = $50,000
The beginning of the year = $40000(At risk basis)
Gross income during the year = $140,000
Grace taxable income during the year = ?
Computation of Grace taxable income during the year :
Grace taxable income during the year = Gross income during the year - Deductible beginning loss during the year
Grace taxable income during the year = $140,000 - $40,000
Grace taxable income during the year = $100,000
Therefore, her taxable income reduced from $140,000 to $100,000
Explanation:
Can i get brainliest plz
five (5) specific forces that are acting as stimulants for change, state and explain them with relevant examples.
Explanation:
It can be mentioned as the five specific forces that are acting as stimulators for change the forces:
Competition Nature of the workforce economy Policy TechnologyThese are stimulating forces for change because they are factors that drive the change process so that organizational activities are able to remain and adapt in the market according to what happens in your micro and macro business environment.
Market competition is a factor that makes companies always willing to develop new methods, products and services so that they can achieve better results in the market search than competing companies. Integrated with the competition is the search for technology, which innovates the way in which techniques are developed and exists to facilitate and change work, as well as methods of using work forces.
Political and economic scenarios are also forces that drive change and the decisions that companies make in the market to seek better results and achieve their goals.
Quickly , Giving brainliest for CORRECT awnser.
Answer:
C
Explanation:
i think
Information about the assets of TAP Holdings is provided below:
• TAP purchased land on January 1, 2013 for $250 million. As of January 1, 2018, the fair value was estimated to be $290 million.
• TAP purchased a trademark on January 1, 2016 for $150 million. As of January 1, 2018, the fair value was estimated to be $80 million.
• TAP acquired a company on Jun 5, 2016 and recognized $880 million in goodwill as a result. A $140 million goodwill impairment was recognized at year end 2017.
• Assume a useful life of 5 years and the straight-line method for any depreciable or amortizable assets above.
Assume TAP reports under US GAAP. What is the total value of these assets reported on TAP's balance sheet as of January 1, 2018
a) $ 1,070 million
b) $ 890 million
c) $1,170 million
d) $1,140 million
Answer:
The total value of these assets reported on TAP's balance sheet as of January 1, 2018 is $ 1,070 million. The right answer is a
Explanation:
In order to calculate the total value of these assets reported on TAP's balance sheet as of January 1, 2018 we would have to make the following calculation with the following formula:
Total Value of Assets = Land at cost + Trade Mark at Fair Value + Goodwill after impairment loss
Note: Under the US Gaap the land is presented at Cost
Therefore, Total Value of Assets = $250 million + $80 million + ( $880 million-$140 million)
Total Value of Assets = $250 million+$80 million+$740 million
Total Value of Assets = $ 1,070 million
The total value of these assets reported on TAP's balance sheet as of January 1, 2018 is $ 1,070 million
Vibrant Company had $980,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $540,000 in each of those years. It also maintained a $280,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $260,000 rather than the correct $280,000.
Required:
1. Determine the correct amount of the company's gross profit in each of the years 2016-2018
2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2016-2018.
Answer:
(1)$440,000 (2) due to this error in inventory it had an effect on both years 2016 and 2017 because closing inventory of previous year will be opening inventory of the subsequent year.
Explanation:
Solution
Given that:
(1) The correct amount of gross profit in each of the years 2016-18 is given as follows:
The Gross profit = Sales- purchases +closing inventory-Inventory at beginning
The Gross profit = $980,000-540,000+280,000-280,000 =$440,000
(2)The Comparative income statement to show the effect of error in cost of goods sold of vibrant company is shown below:
Particular 2016 2017 2018 3 years total
Sales $980,000 $980,000 $980,000 $2,940,000
Cost of goods sold
Purchases $540,000 $540,000 $540,000 $1,620,000
add :Beginning inventory:
$280,000 $260,000 $280,000 280,000
Less: Closing inventory:
($260,000) ($280,000) (280,000) (280,000)
Total Cost of goods sold:
$560,000 $520,000 $540,000 $540,000
Gross profit $420,000 $460,000 $440,000 $440,000
For this error in inventory it had an effect on both years 2016 and 2017 because closing inventory of previous year will be opening inventory of the subsequent year.
Sarah and Wei have an opportunity to buy a large parcel of land on the Willamette River, just two miles south of Salem. They want to build an amusement park on the land. Sarah approaches you and says, "Hey, I know you took that BA 333 class, so maybe you can help me figure out what to do. Wei and I need a lot of money to start up our amusement park and buy the land we want, and we're a little nervous about getting sued if someone gets thrown out of our roller coaster. What kind of business do you think we should we set up? We were thinking maybe we could just be partners. We'd prefer not to have anything formal written down--we think that might be bad for our friendship. What's your advice?"
Draft an answer to Sarah and Wei and include it in your document. Your answer should include: 1) your recommendation for the best entity choice; 2) a complete explanation of why this is the best option; 3) a secondary recommendation, in case Sarah and Wei don't like your first option; 4) an explanation as to why this is your second choice (i.e., compare to your first choice and explain why this is not as good, but still an acceptable option).
Answer:
Explanation below.
Explanation:
The recommendation that I will give or propose is that the agreement must have a legal backing.
This is the best recommendation that a wise person can proposes. It is a show of height of stupidity when an individual go into conjunction with another person without any written agreement that is backed legally. This because, when there is a problem in the future, the documents will be a way to solve it.
The other secondary option is written and signed agreement with video recording. This is not as good as the one mentioned above, but can still be considered as an alternative.
is it possible for a hospitality operation to be operating at a profit durany any given month but to simultaneously have insufficient cash flow during that same month
Answer:
Yes
Explanation:
Cash flow is defined as the available cash for business operation as a result of the difference between the cash available at the beginning of a period and the cash available at the end of that period ,
One major factor responsible for an insufficient cash flow is the bad timing of income and expenses. Imagine your bills are due and overdue customers invoices are not yet paid . It may also be that a lot is invested in the inventory while a little income is earned.
When more is being spent on investment compared to what is coming in , it can also lead to poor cash flow.
As an hospitality also engages in activities that could impact cash flow as mentioned above , it is possible it operates at profit and still have an insufficient cash flow.
When Angela graduated with a degree in computer science and started her software company, she posted a sign that read, "This company will always operate within the legal limits of the law." Posted where all employees could clearly see it each day, this demonstrated __________.
O her commitment to high ethical standards of behavior.
O her expectation that all employees follow the laws that apply to the business.
O her commitment to respect the law.
O her aversion to cheating, stealing, and dishonesty.
Answer: her expectation that all employees follow the laws that apply to the business.
Explanation: Angela posting a sign that read "This company will always operate within the legal limits of the law." and by posting it where all her employees could see each day only serves to reinforce her expectation that all employees follow the laws that apply to the business. By following the laws that apply to the business and by employees doing same help ensures that her business is protected from paying the price of convictions from crimes that are against the law. Be that as it may, it is important for companies to operate within legal frameworks as this ensures that a company behaves in an ethical manner.
Answer:
Her expectation that all employees follow the laws that apply to the business.
Explanation:
In as much as it is self explanatory above that she wants her employees to adhere to the government policies, she also want them to adhere to the policies guiding and protecting her business. Also an employment contract may state how long this qualification period is;
Working out employment status for an employee.
Also they could be required to: 1). work regularly unless they’re on leave, for example holiday, sick leave or maternity leave.
2). They’re required to do a minimum number of hours and expect to be paid for time worked.
3). They can’t send someone else to do their work.
4). The business deducts tax and National Insurance contributions from their wages.
5). They get paid holiday.
6). They’re entitled to contractual or Statutory Sick Pay, and maternity or paternity pay.
Ayala Inc. has conducted the following analysis related to its product lines, using a traditional costing system (volume-based) and an activity-based costing system. Both the traditional and the activity-based costing systems include direct materials and direct labor costs.
Products Sales Revenue Traditional ABC
Product 540X 198,200 54,440 45,520
Product 137Y 158,700 49,090 39,290
Product 249S 83,190 11,290 30,010
Instructions
a) For each product line, compute operating income using the traditional costing system.
b) For each product line, compute operating income using the activity-based costing system
c) Using the following formula, compute the percentage difference in operating income for each of the product lines of Ayala:{Operating Income (ABC)-Operating Income traditional cost)]divided operating Income (traditional cost)(round the percentage to two decimals).
Answer and Explanation:
a. The computation of operating income using the traditional costing system is shown below:-
Product Sales Revenue Traditional Operating income
540X $198,200 $54,440 $143,760
137Y $158,700 $49,090 $109,610
249S $83,190 $11,290 $71,900
Therefore for reaching the operating income we simply deduct the traditional from sales revenue of every product.
b. The computation of operating income using the activity-based costing system is shown below:-
Products Sales Revenue ABC Operating income
540X $198,200 $45,520 $152,680
137Y $158,700 $39,290 $119,410
249S $83,190 $30,010 $53,180
So, for reaching the operating income we simply deduct the ABC from sales revenue of every product.
c. The computation of percentage difference in operating income for each of the product lines is shown below:-
Products Operating Income Operating Income Percentage
(ABC) traditional cost difference
540X $152,680 $143,760 6.20%
137Y $119,410 $109,610 8.94%
249S $53,180 $71,900 -26.04%
Now, to reach the percentage difference we simply deduct the operating income traditional cost from operating income and after the result we divide by operating income traditional cost.
The calculation of following things should be done below:
a. The computation of operating income using the traditional costing system is
Product Sales Revenue Traditional Operating income
540X $198,200 $54,440 $143,760
137Y $158,700 $49,090 $109,610
249S $83,190 $11,290 $71,900
b. The computation of operating income using the activity-based costing system is
Products Sales Revenue ABC Operating income
540X $198,200 $45,520 $152,680
137Y $158,700 $39,290 $119,410
249S $83,190 $30,010 $53,180
c. The computation of percentage difference in operating income for each of the product lines
Products Operating Income Operating Income Percentage
(ABC) traditional cost difference
540X $152,680 $143,760 6.20%
137Y $119,410 $109,610 8.94%
249S $53,180 $71,900 -26.04%
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The expectancy theory proposes that ________. extrinsic rewards will reduce intrinsic interest in a task employees can view work as being as natural as rest or play, and therefore the average person can learn to accept, and even seek, responsibility achievement, power, and affiliation are three important needs that help explain motivation within every human being, there exists a hierarchy of five needs and as each of these needs becomes substantially satisfied, the next one becomes dominant the strength of a tendency to act in a certain way depends on the strength of our expectation of a given outcome and its attractiveness
Answer: The strength of a tendency to act in a certain way depends on the strength of our expectation of a given outcome and its attractiveness
Explanation:
The Expectancy Theory defines the efforts of individuals at work. It suggests that people only work as hard as they think is needed for them to get a certain reward or benefit. This is why when there is just a basic salary, employees are not very hard-working but if a car is thrown in as a bonus for the employee of the year, they really put in work.
It therefore shows that the strength to act in a certain way is based on how an individual believes they will be compensated and if that compensation is worth it.
Basis of accounting refers to the body of accounting principles that determines when the effect of a financial transaction or event should be recognized for financial reporting purposes. It is a set of rules that determine when revenues and expenditures are recognized in the books of accounts. Unlike Private Business Accounting, many different basis of accounting is accepted in Public Sector Accounting. However, in recent times, there have been strong advocate by the body of Accountants and some NGOs that Ghana should adopt Accrual Basis of Accounting in the Public Sector as in the Private sector to increase the level of accountability in the Public Sector. Required: Justify with five (5) reasons why in your opinion, the Accrual Basis of Accounting should be adopted by Ghanaian State entities in preparing their Financial Reports and give five (5) possible challenges they are likely to encounter by adopting the Accrual Basis of Accounting.
Answer:
The Accrual Basis of Accounting is defined as a method used by the company to document the transactions when the event is added together rather than when cash is received.
The advantages or reasons of adopting Accrual Basis of Accounting and it's challenges is stated below in the explanation section.
Explanation:
Solution:
Accrual Basis of Accounting is refers to a tool used by the company to document the transactions when the event is added together rather than when cash is received.
The following are reasons in adopting Accrual Basis of Accounting which is stated below:
It assist in the maximization of operational abilities of business by spreading the revenue recognition. It provides the clear view of business regarding transactions that transpire over a period of time. Transactions that are documented over time under accrual basis of accounting are considered to be precise. Accrual basis of accounting helps the investors to invest their money in the business. Business associated with accrual basis of accounting produce statements on monthly basisThe challenges encountered while adopting the Accrual Basis of Accounting is stated below:
Companies using the accrual basis of accounting may encounter difficulty as it demands excessive generation of reports which may take a lot of time.Under this accrual basis, business taxes are paid on revenues much more than they are actually received. By making use of Accrual basis of accounting, small companies faces major problems due to non availability of staff for operating accrual basis. It creates problems in accessing transactions and also difficult in tracking of payments.(Ignore income taxes). Dunay Corporation is considering investing $510,000 in a project. The life of the project would be 4 years. The project would require additional working capital of $24,000 which would be released for use elsewhere at the end of the project. The annual net cash inflows would be $162,000. The salvage value of the assets used in the project would be $41,000. The company uses a discount rate of 10%.
Compute the net present value of the project.
Answer:
NPV = $23,914.076
Explanation:
The net present value NPV) of a project is the present value of cash inflow less the present value of cash outflow of the project.
NPV = PV of cash inflow - PV of cash outflow
PV of cash inflow= 162,000 × (1- 1.1^(-4)/0.1)=513518.2023
PV of salvage value = 41,000× 1.1^(-4)= 28,003.55167
PV of recouped working capital = 24,000 × 1.1^(-4)= 16,392.32293
NPV = 513518.2023 + 28,003.55167 +16,392.32293 - (510,000+24,000)
=23914.076
NPV = $23,914.076
Department R had 4,200 units in work in process that were 70% completed as to labor and overhead at the beginning of the period. During the period, 36,600 units of direct materials were added, 38,500 units were completed, and 2,300 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was:
a. 36,480
b. 38,500
c. 40,680
d. 45,000
Answer:
a. 36,480
Explanation:
Beginning work in process = 4,200 * (1 - 70%) = 1,260
Units started and completed = 38,500 - 4,200 = 34,300
Ending work in process = 2,300 * 40% = 920
Number of equivalent units = 1,260 + 34,300 + 920 = $36,480
When Disney relied on licensing agreements with the Oriental Land Company to open its first foreign theme park, Tokyo Disneyland, 35) A) Its licensing partner, the Oriental Land Company reaped the windfall, because the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain. B) Japanese consumer buying habits and demographics no longer posed a challenge for Disney. C) It was Disney, not the Oriental Land Company, that reaped the windfall because of learning curve effects. D) Disney no longer needed to contend with fluctuating exchange rates and country-to-country variations in host government restrictions and requirements. E) Disney was able to meet the challenge of localizing its product offerings in Japan, leading to a low-cost advantage.
Answer:
Letter A is correct. Its licensing partner, the Oriental Land Company reaped the windfall, because the partner who bore the risk was also likely to be the biggest beneficiary from any upside gain.
Explanation:
When analyzing the other Disneylandia around the world, we can see a different case in Tokyo Disneylandia, which is the first in the world that does not belong entirely to Disney. Upon being opened under a license agreement in Tokyo, Disney receives only a royalty fee, and Oriental Land Company receives a substantially favorable profit from the existing value of the Disney brand in the world, and from its stable and well-structured operations model .
So in this license agreement, Disney controls the creative part of the business, and the Oriental Land Company operates the business, which means that there are profitable advantages for both companies.
Answer:
a
Explanation:
2. Problem Statement: Quantum Logistics, Inc., a wholesale distributor, is considering the construction of a new warehouse to serve the southeastern geographic region near the Alabama-Georgia border. There are three cities being considered. After site visits and a budget analysis, the expected income and costs associated with locating in each of the cities has been determined. The life of the warehouse is expected to be 12 years, and MARR is 15%/year.
City Initial Cost Net Annual Income
Lagrange $990,000 $50,000
Auburn $710,000 $155,000
Anniston $850,000 $270,000
What is the annual worth of each site? (Round answers to the nearest dollar; tolerance is +2.00)
Answer:
City Annual worth($)
Lagrange (132,635.97)
Auburn 24,018.65
Anniston 113,191.34
Explanation:
Annual worth of each site is the equivalent annual cost . It is determined by dividing the net present value of cost by the annuity factor of the investment period.
Net Present Value of cost = Initial cost - Present Value(PV) of annual income
PV of annual income = Annual income × Annuity factor
Annuity factor = (1 - (1+r)^(-n))/ r
r 15%, n -12
Annuity factor = (1 - 1.15^(-12))/0.15= 5.4206
PV of annual income = 50,000 × 5.4206= 271,030.9499
Net Present Value of cost = 990,000 - 271,030.94 = $(718,969.05 )
Annual worth= $(718,969.05 )/ 5.4206= (132,635.97)
Auburn
PV of annual income = 155,000× 5.4206= 840,195.94
NPV = 710,000 - 840,195.94 = 130,195.94
Annual worth = 130,195.9448/ 5.4206= 24,018.65
Anniston
PV of annual income = 270,000× 5.4206= 1,463,567.13
NPV = 850,000 - 1,463,567.13 = 613,567.12
Annual cost = 613,567.12 /5.4206= 113,191.34
City Annual worth
Lagrange (132,635.97)
Auburn 24,018.65
Anniston 113,191.34
The following is a list of prices for zero-coupon bonds of various maturities. a. Calculate the yield to maturity for a bond with a maturity of (i) one year; (ii) two years; (iii) three years; (iv) four years. (Do not round intermediate calculations. Round your answers to two decimal places.) b. Calculate the forward rate for (i) the second year; (ii) the third year; (iii) the fourth year. (Do not round intermediate calculations. Round your answers to two decimal places.) Maturity (years) Price of Bond 1 $ 910.90 2 907.97 3 828.12 4 768.49 rev: 09_11_2017_QC_CS-99538
Answer:
Explanation:
future value = present value (1 + y)^n
where future value = $1000
present value = price of the bond
y = yield to maturity
n = number of years to maturity
re - writing above formula
y = (future value / present value)^1/n - 1
b)
forward rate = [(1 + yn)n / (1 + yn-1)n-1] - 1
where yn = YTM of current year
yn-1 = YTM of previous year
g Jon owns a company in Santa Barbara that has a patent on a specialized product. The inverse demand for the product is P = 24 - q. Jon's cost function is C(q)=q^{2}. Concerned about the high price that Jon charges for his product, the government decides to subsidize Jon so as to eliminate the deadweight loss. How much must the per-unit subsidy be to completely eliminate the deadweight loss?
Answer:
$2 per-unit subsidy.
Explanation:
So, we are given the following data or parameters or information in the question above;
=> "The inverse demand for the product is P = 24 - q. "
=> "Jon's cost function is C(q)=q^{2}. "
(1). For profit to be maximized the value of Margin Revenue, MR = marginal cost, MC.
MR = marginal cost= dTR/ dq, where TR = p × q = (24 - q ) q = 24q - q^2.
MR = marginal cost = 24 - 2q.
Also, marginal cost, MC = dCq/dq = d/dq × (q)^2.
marginal cost, MC = 2q.
MR = MC; 24 - 2q = 2q.
q = 6.
NB: Pm = 24 - qm.
Pm = 24 - 6 = $18.
(2). For optimum quantity; p = marginal cost.
24 - q = 2q.
q* = 8.
p* = 2 × 8 =$ 16.
On a price versus quantity curve, the dead weight loss = area shaded under the curve.
Quantity to produce = 12.
At MC* = MR, Qm = Q* and On= p*.
The amount of per-unit subsidy be to completely eliminate the deadweight loss = 18 - 16 = $2.
Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2017.
BRECKER INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2017 AND 2016
12/31/17 12/31/16
Cash $6,000 $7,000
Accounts receivable 62,000 51,000
Short-term debt investments
(available-for-sale) 35,000 18,000
Inventory 40,000 60,000
Prepaid rent 5,000 4,000
Equipment 154,000 130,000
Accumulated depreciation
—equipment (35,000 ) (25,000 )
Copyrights 46,000 50,000
Total assets $313,000 $295,000
Accounts payable $46,000 $40,000
Income taxes payable 4,000 6,000
Salaries and wages payable 8,000 4,000
Short-term loans payable 8,000 10,000
Long-term loans payable 60,000 69,000
Common stock, $10 par 100,000 100,000
Contributed capital, common
stock 30,000 30,000
Retained earnings 57,000 36,000
Total liabilities &
stockholders’ equity $313,000 $295,000
BRECKER INC.
INCOME STATEMENT
FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue $338,150
Cost of goods sold 175,000
Gross profit 163,150
Operating expenses 120,000
Operating income 43,150
Interest expense $11,400
Gain on sale of equipment 2,000 9,400
Income before tax 33,750
Income tax expense 6,750
Net income 27000
Additional information:
1. Dividends in the amount of $6,000 were declared and paid during 2017.
2. Depreciation expense and amortization expense are included in operating expenses.
3. No unrealized gains or losses have occurred on the investments during the year.
4. Equipment that had a cost of $20,000 and was 70% depreciated was sold during 2017.
Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Answer and Explanation:
The presentation of the cash flow statement using the direct method is presented below:
Cash flow statement
Particulars Amount ($) Total Amount($)
Cash flow from operating activities:-
Cash received from customers 327,150
Less-Cash paid to suppliers (149,000)
Less-Cash paid for operating expenses (89,000)
Less-Cash paid for interest (11,400)
Less- Cash paid for income taxes (8,750)
Net cash $69,000
Cash flow from investing activities
Sale of equipment {[$20,000-($20,000 × 70%)] + $2,000} 8,000
Less-Equipment purchase [$154,000 - ($130,000 - $20,000)] (44,000)
Less - Purchase of available –for-sale on investments (17,000)
($18,000-$35,000)
Net cash used by investing activities $53,000
Cash flow from financing activities:-
Less - Principle payment on long term loan ($69,000-$60,000) (9,000)
Less - Principle payment on short term loan ($10,000-$8,000) (2,000)
Less - Paid Dividend (6,000)
Net cash used by financing activities ($17,000)
Net Cash decrease (1,000)
Add : December 31,2016 Cash 7,000
December 31,2017 Cash 6,000
Working notes
1. Particular Amount ($)
Sales 338,150
Less - Account Receivable increase ($62,000-$51,000) (11,000)
Cash received by customers 327,150
2. Particular Amount ($)
Cost of goods sold 175,000
Less-Decrease in inventory ($40,000-$60,000) (20,000)
Less-Increase in accounts payable ($46,000-$40,000) (6,000)
Cash paid to suppliers 149,000
3. Particular Amount ($)
Operating expenses 120,000
Add-Increase in prepaid rent ($5,000-$4,000) 1,000
Less-Amortization of copyright ($46,000-$50,000) (4,000)
Less-Depreciation expenses [$35,000-{$25,000-($20,000*70/100)}] (24,000)
Less-Increase in salaries and wages payable($4,000-$8,000) (4,000)
Cash paid for operating expenses 89,000
4. Particular Amount ($)
Income tax expense 6,750
Add-Income tax payable decrease($6,000-$4,000) 2,000
Total cash paid for income tax 8,750
The statement of cash flows using the direct method is $6,000.
Brecker Inc., Statement of cash flows
Cash flows from operating activities:
Cash received from customers $327,150
[$338,150 - ($62,000 - $51,000)]
Less Cash paid to suppliers ($149,000)
[$175,000 - ($46,000 - $40,000) + ($40,000 - $60,000)]
Less Cash paid for operating expenses ($89,000)
[$120,000 + ($5,000 - $4,000) - ($35,000 - ($25,000 - ($20,000 ×70%))) + ($46,000 - $50,000) + ($4,000 - $8,000)]
Less Cash paid for interest ($11,400)
Less Cash paid for income taxes ($8,750)
[$6,750 + ($6,000 - $4,000)]
Net cash provided by operating activities $69,000
Cash flows from financing activities:
Sales of equipment $8,000
[($20,000 - ($20,000 ×70%)) + $2,000]
Less Purchase of equipment ($44,000)
($154,000 - $130,000 + $20,000)
Add Purchase of available-for-sale investments -$17,000
($18,000 -$35,000)
Net cash used by financing activities -$53,000
Cash flows from investing activities:
Principal payment on short-term loan -$2,000
($8,000 - $10,000)
Less Principal payment on long-term loan ($9,000)
($69,000 - $60,000)
Less Dividend payment $6,000
Net cash used by financing activities -$17,000
Net decrease in cash -$1,000
[$69,000+(-$53,000)+(-$17,000)]
Add Cash, December 31, 2016 $7,000
Cash, December 31, 2017, $6,000
($-1,000+$7,000)
Inconclusion the statement of cash flows using the direct method is $6,000.
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Phelps Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $1,200,000 for 50,000 shares. Kulikowski Inc declared and paid an 50.85 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $730,000 for 2021. The fair value of Kulikowski's stock was $27 per share at December 31, 2021
Required:
a. Prepare the journal entries for Jayce Phelps inc. for 2020 and 2021, assuming that Phelps cannot exercise significant influence over Kulkowski.
b. Prepare the journal entries for Jayce Phelps Inc. for 2020 and 2021, assuming that Phelps can exercise significant influence over Kulikowski.
c. At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods?
Answer and Explanation:
Phelps Inc
a)
Date Account titles and Explanation Debit ($) Credit ($)
Dec.31,2020
Dr Equity Investments 1,200,000
Cr Cash 1,200,000
June 30,2021
Dr Cash (50,000 shares * $0.85) 42,500
Cr Dividend Revenue 42,500
Dec. 31, 2021
Dr Cash (50,000 shares * $0.85) 42,500
Cr Dividend Revenue 42,500
Dr Fair Value Adjustment (Available-for-Sale) 150,000
Cr Unrealized Holding Gain or Loss - Equity* 150,000
Unrealized Holding Gain or Loss - Equity-
Amount ($)
Cost 1,200,000
Fair Value (50,000 shares * $27) 1,350,000
Unrealized Gain or (Loss) 150,000
b)
Date Particulars Debit ($) Credit ($)
Dec.31,2020
Dr Equity Investments (Kulikowski Stock)
1,200,000
Cr Cash 1,200,000
June 30,2021
Dr Cash (50,000 shares * $0.85) 42,500
Cr Equity Investment (Kulikowoski Stock) 42,500
Dec. 31, 2021
Dr Cash (50,000 shares * $0.85) 42,500
Cr Equity Investments (Kulikowski) 42,500
Dec 31, 2021
Dr Equity Investment (Kulikowski Stock) 146,000
CrRevenue from Investments (730000 * 20%) 146,000
c)
Reporting of investment in securities on the balance sheet:
Fair value method = (1,200,000+150,000)
= 1,350,000
Equity method = (1,200,000-42,500-42,500+146,000) = 1,261,000
Reporting on net income on the income statement:
Fair value method = Dividend Revenue = (42,500+42,500)= 85,000
Equity meethod = Revenue from investments = 146,000
You are considering adding a new food product to your store for resale. You are certain that, in a month, minimum demand for the product will be 5 units, while maximum demand will be 8 units. (Unfortunately, the new product has a one-month shelf life and is considered to be waste at the end of the month.) You will pay $60/unit for this new product while you plan to sell the product at $100 ($30/unit profit). The estimated demand for this new product in any given month is 6 units (p=0.1), 7 units (p=0.4) and 8 units (p=0.5).
Required:
1. Using EMV analysis, how many units of the new product should be purchased for resale?
Answer:
explain the question better
Succulent Juice Company manufactures and sells premium tomato juice by the gallon. Succulent just finished its first year of operations. The following data relates to this first year of operations.Number of Gallons Produced 80,000Number of Gallons Sold 70,000Sales Price $3.00/gallonUnit Product Cost (variable costing) $1.45/gallonContribution Margin $84,000Total Fixed Manufacturing Overhead $?Total Fixed Selling & Administrative $25,000Variable Selling & Administrative $?Inventory value under absorption costing $29,500Required:1. Prepare an Income statement for Succulent using the Absorption Costing Method. (Hints: How many units were in inventory? What was the cost per unit? Why is the CM only $84,000?)2. Explain in one or two sentences, the key differences between the net income under Absorption and the net income under Variable costing. Determine the variable costing net income. Prepare a variable costing income statement.
Answer:
Instructions are below.
Explanation:
Giving the following information:
Number of Gallons Produced 80,000
Number of Gallons Sold 70,000
Sales Price $3.00/gallon
Unit Product Cost (variable costing) $1.45/gallon
Contribution Margin $84,000
Total Fixed Manufacturing Overhead $?
Total Fixed Selling & Administrative $25,000
Variable Selling & Administrative $?Total Fixed Selling & Administrative $25,000
Variable Selling & Administrative $?
Inventory value under absorption costing $29,500
The difference between the absorption and variable costing method is that the first one includes the fixed manufacturing overhead in the product cost.
Absorption= direct material + direct labor + total unitary overhead
Variable= direct material + direct labor + unitary variable overhead
First, we will calculate all the missing information:
Sales= 3*70,000= 210,000
Total variable cost= 210,000 - 84,000= 126,000
Unitary varaible cost= 126,000/70,000= $1.8 per unit
Unitary variable selling and administrative= 1.8 - 1.45= 0.35
Unitary inventory production cost (absorption)= 29,500/10,000= $2.95
Unitary fixed manufacturing cost= 2.95 - 1.45= 1.5
Now, we can determine the income statement under absorption and variable costing method:
Absorption costing:
Sales= 210,000
COGS= 70,000*2.95= (206,500)
Gross profit= 3,500
Total Fixed Selling & Administrative= (25,000)
Variable Selling & Administrative= (0.35*70,000)=
Net operating income= (46,000)
Variable costing method:
Sales= 210,000
Total variable cost= (126,000)
Contribution margin= 84,000
Total Fixed Selling & Administrative= (25,000)
Total fixed manufacturing overhead= (80,000*1.5)= (120,000)
Net operating income= (61,000)
Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch.
3,920 ounces of grape concentrate at $0.01 per ounce
54 pounds of granulated sugar at $0.55 per pound
60 lemons at $0.70 each
50 yeast tablets at $0.21 each
250 nutrient tablets at $0.11 each
1,600 ounces of water at $0.005 per ounce
Hank estimates that 2% of the grape concentrate is wasted, 10% of the sugar is lost, and 25% of the lemons cannot be used.
Required:
1. Compute the standard cost of the ingredients for one gallon of wine. (Carry computations to two decimal places.) (Round unit costs to 2 decimal places, e.g. 2.75.)
Answer:
The standard cost of the ingredients for one gallon of wine is $3.50
Explanation:
In order to calculate the standard cost of the ingredients for one gallon of wine we would have to calculate the following formula:
Total Standard Cost = Standard Cost for Grape + Standard Cost for Sugar + Standard Cost for Lemon + Standard Cost for Yeast Tablets + Standard Cost for Nutrient Tablets + Standard Cost for Water
Standard cost of the ingredients for one gallon of wine
Grape = $40.00 [(3,920 / 0.98) x $0.01]
Sugar = $33.00 [(54 / 0.90) x $0.55]
Lemon = $ 56.00 [(60/ 0.75) x $0.70 ]
Yeast Tablets = $10.50 [50 x $0.21]
Nutrient Tablets = $27.50 [250 x $0.11]
Water = $8.00 [1,600 x $0.005]
Total Standard Cost = $40.00 + $33.00 + $56.00 + $10.50 + $27.50 + $8.00
Total Standard Cost = $175.00
Required Production = 50 Gallon batch.
The Standard cost per gallon = Total Standard Cost / Required Production
The Standard cost per gallon = $175.00 / 50 Gallon Batches
The Standard cost per gallon = $3.50 per gallon batch
The Standard Cost Per Gallon is $3.50
When looking at a country as a market or investment, the international business must consider the country's legal system. In that assessment, the firm needs to understand the differences between private actions, which refer to theft, piracy, blackmail, and the like from individuals or groups, and public actions, which are those actions taken by politicians and government bureaucrats. Either kind of action would pose a serious threat to the firm's investment or operations. Before the firm can seek legal remedies, it must clearly understand the options open to it.
In a legal sense, property refers to a resource over which an individual or a business holds a legal title. It is a resource that it owns. Countries differ in the extent to which their legal systems define and protect property rights, even those countries that are still nominally communist states. Property rights can be violated, sometimes by governments and sometimes by individuals or groups.
Determine form the followings if it pertains more to private or public actions in terms Of property rights and legal protections.
a. Legal mechanisms
b. Theft or blackmail
c. Bribery
d. Organizational plan/ protection money
e. Corruption
f. Weak legal system
Answer: Please refer to Explanation
Explanation:
PRIVATE ACTIONS in TERMS of PROPERTY RIGHTS and LEGAL PROTECTIONS.
These are actions that result from individuals or corporations that are not in the public domain.
Such actions include therefore.
a) Weak Legal System
Here the private action could be an individual taking advantage of a weak legal system to refuse to carry out an agreement knowing that the court will do nothing about it.
b) Theft of Blackmail
This is a private action where individuals or a group could try to steal or extort money from the company. For example, hackers stealing company data and demanding payment for it.
c) Organizational plan/ protection money.
Private action involving Racketeering.
PUBLIC ACTIONS in TERMS of PROPERTY RIGHTS AND LEGAL PROTECTIONS. .
These are actions by the Government or by it's agents.
a) Bribery
Public Actions where a government official or agent demands or would prefer that you pay them some fee to get things done faster or at all.
b) Corruption
Public action that goes hand in hand with bribery but encompasses more. For instance, the government may only award contracts to their own companies or companies they have a share in.
c). Legal Mechanisms
Public action that involves the laws and rules concerning the setting up of companies in the country such as licensing fees or Corporate taxes.
Amazon.com, Inc., headquartered in Seattle, WA, started its electronic commerce business in 1995 and expanded rapidly. The following transactions occurred during a recent year (dollars in millions):
1. Issued stock for $623 cash (example).
2. Purchased equipment costing $6,320, paying $4,893 in cash and charging the rest on account.
3. Paid $5,000 in principal and $300 in interest expense on long-term debt.
4. Earned $177,866 in sales revenue; collected $123,949 in cash with the customers owing the rest on their Amazon credit card account.
5. Incurred $25,249 in shipping expenses, all on credit.
6. Paid $118,241 cash on accounts owed to suppliers.
7. Incurred $10,069 in marketing expenses; paid cash.
8. Collected $38,200 in cash from customers paying on their Amazon credit card account.
9. Borrowed $16,231 in cash as long-term debt.
10. Used inventory costing $111,934 when sold to customers.
11. Paid $830 in income tax recorded as an expense in the prior year.
Required:
For each of the transactions, complete the tabulation, indicating the effect (positive value for increase, negative value for decrease, and leave blank if no effect) of each transaction.
Answer:
1. Issued stock for $623 cash
Assets increase by $623
Stockholders' equity increase by $623
2. Purchased equipment costing $6,320, paying $4,893 in cash and charging the rest on account.
Assets increase by $6,320 (equipment)
Assets decrease by $4,893 (cash)
So assets net increase by $1,427
Liabilities increase by $1,427 (the amount that was paid on account)
3. Paid $5,000 in principal and $300 in interest expense on long-term debt.
Liabilities decrease by $5,300
4. Earned $177,866 in sales revenue; collected $123,949 in cash with the customers owing the rest on their Amazon credit card account.
Revenue increases by $177,886.
Assets increase by $177,886
5. Incurred $25,249 in shipping expenses, all on credit.
Expenses increase by $25,249
Liabilities increase by $25,249
6. Paid $118,241 cash on accounts owed to suppliers.
Assets decrease by $118,241
Liabilities decrease by $118,241
7. Incurred $10,069 in marketing expenses; paid cash.
Expenses increase by $10,069
Assets decrease by $10,069
8. Collected $38,200 in cash from customers paying on their Amazon credit card account.
Assets increase by $38,200
9. Borrowed $16,231 in cash as long-term debt.
Assets increase by $16,231
Liabilities increase by $16,231
10. Used inventory costing $111,934 when sold to customers.
Assets decrease by $111,934
11. Paid $830 in income tax recorded as an expense in the prior year.
Liabilities decrease by $830
1.
Assets increase by $623
Stockholders' equity increase by $623
2.
Assets increase by $6,320 (equipment)
Assets decrease by $4,893 (cash)
So assets net increase by $1,427
Liabilities increase by $1,427
3.
Liabilities decrease by $5,300
4.
Revenue increases by $177,886.
Assets increase by $177,886
5.
Expenses increase by $25,249
Liabilities increase by $25,249
6.
Assets decrease by $118,241
Liabilities decrease by $118,241
7.
Expenses increase by $10,069
Assets decrease by $10,069
8.
Assets increase by $38,200
9.
Assets increase by $16,231
Liabilities increase by $16,231
10.
Assets decrease by $111,934
11.
Liabilities decrease by $830
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An X-bar R chart was prepared for an operation using twenty samples with 5 pieces in each sample. X-bar-bar was found to be 33.6and R=bar was 6.2. During production a sample of 5 was taken and the pieces measured 36, 43, 37, 25, and 38. At the time this sample was taken: Select the correct answer:
a. Both the average and range were within control limits.
b. Neither the average nor range were within control limits.
c. Only the average was outside control limits.
d. Only the range was outside control limits.
Answer:
D) Only the range was outside control limits.
Explanation:
The range is the difference between the largest and smallest set of data, or in this case the longest and shortest pieces. In this case, the longest piece measured 43 and the shortest 25, so the range was 18 which is much higher than the control range, 6.2, so it clearly is outside any type of control limit.
The mean of the 5 samples was 35.8, which is only 2.2 away from the mean of the control chart. Even though it is higher than the control mean, the difference represents only 6.5% which can be considered normal.
Condensed financial data of Monty Company for 2020 and 2019 are presented below.
MONTY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2020 AND 2019
2020 2019
Cash $1,810 $1,160
Receivables 1,740 1,310
Inventory 1,630 1,890
Plant assets 1,910 1,720
Accumulated depreciation (1,220 ) (1,180 )
Long-term investments (held-to-maturity) 1,280 1,420
$7,150 $6,320
Accounts payable $1,220 $920
Accrued liabilities 190 240
Bonds payable 1,420 1,580
Common stock 1,940 1,730
Retained earnings 2,380 1,850
$7,150 $6,320
MONTY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2020
Sales revenue $6,960
Cost of goods sold 4,780
Gross margin 2,180
Selling and administrative expenses 920
Income from operations 1,260
Other revenues and gains
Gain on sale of investments 80
Income before tax 1,340
Income tax expense 550
Net income 790
Cash dividends 260
Income retained in business $530
Additional information:
During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2020.
Required:
1. Prepare a statement of cash flows using the indirect method.
Answer:
Monty Company
Statement of Cash Flows
December 31, 2020
Cash flows from operating activities
Net income $790
Adjustments to reconcile net income $40
+ depreciation expense $40
+ decrease in inventory $260
+ increase in accounts payable $300
- gain from sale of investments ($80)
- increase in accounts receivable ($430)
- decrease in accrued liabilities ($50)
Net cash flow from operating activities $830
Cash flows from investing activities
Sale of long term investments $140
Gain from sale of investments $80
Purchases of P, P & E ($190)
Net cash flow from investing activities $30
Cash flow from financing activities
Issuance of Common Stocks $210
- Payments of long term debt ($160)
- Dividends paid ($260)
Net cash from financing activities ($210)
Net increase in cash $650
+ Beginning cash balance $1,160
Ending cash balance $1,810
Match each item characteristics, assumptions, principles, and constraint guide the FASB when it creates accounting standards with a description below.1. select an option Going Concern Assumption Periodicity Assumption Materiality Economic Entity Assumption Monetary Unit Assumption RelevanceCost Constraint Comparability Full Disclosure Principle Historical Cost Principle Consistency Faithful Representation Items not easily quantified in dollar terms are not reported in the financial statements.2. select an option Periodicity Assumption Historical Cost Principle Comparability Monetary Unit Assumption Economic Entity Assumption Consistency Relevance Full Disclosure Principle Faithful Representation Cost Constraint Materiality Going Concern Assumption Accounting information must be complete, neutral, and free from error.3. select an option Comparability Monetary Unit Assumption Materiality Economic Entity Assumption Full Disclosure Principle Relevance Periodicity Assumption Consistency Cost Constraint Faithful Representation Historical Cost PrincipleGoing Concern Assumption Personal transactions are not mixed with the company’s transactions.4. select an option Cost Constraint Going Concern Assumption Monetary Unit Assumption Consistency Economic Entity Assumption Relevance Faithful Representation Comparability Periodicity Assumption Historical Cost Principle Full Disclosure Principle Materiality The cost to provide information should be weighed against the benefit that users willgain from having the information available.5. select an option Relevance Cost Constraint Faithful Representation Comparability Going Concern Assumption Consistency Periodicity Assumption Full Disclosure Principle Materiality Monetary Unit Assumption Economic Entity Assumption Historical Cost Principle A company’s use of the same accounting principles from year to year.6. select an option Consistency Periodicity Assumption Cost Constraint Historical Cost Principle Materiality Full Disclosure Principle Going Concern Assumption Faithful Representation Economic Entity Assumption Relevance Monetary Unit Assumption Comparability Assets are recorded and reported at original purchase price.7. select an option Full Disclosure Principle Monetary Unit Assumption Historical Cost Principle Materiality Consistency Periodicity Assumption Relevance Going Concern Assumption Economic Entity Assumption Comparability Faithful Representation Cost Constraint Accounting information should help users predict future events, and should confirm or correctprior expectations.8. select an option Consistency Comparability Materiality Full Disclosure Principle Going Concern Assumption Faithful Representation Relevance Economic Entity Assumption Historical Cost Principle Monetary Unit Assumption Cost Constraint Periodicity Assumption The life of a business can be divided into artificial segments of time.9. select an option ComparabilityMonetary Unit AssumptionEconomic Entity Assumption Periodicity Assumption Relevance Full Disclosure PrincipleGoing Concern Assumption Cost Constraint Consistency Historical Cost Principle Materiality Faithful Representation The reporting of all information that would make a difference to financial statement users.10. select an option RelevanceGoing Concern AssumptionConsistencyMonetary Unit Assumption Periodicity Assumption Historical Cost Principle Faithful Representation Comparability Materiality Full Disclosure Principle Economic Entity Assumption Cost Constraint The judgment concerning whether an item’s size makes it likely to influence a decision-maker.11. select an option Monetary Unit Assumption Comparability Relevance Full Disclosure Principle Materiality Cost Constraint Historical Cost Principle Periodicity Assumption Consistency Going Concern Assumption Economic Entity Assumption Faithful Representation Assumes a business will remain in operation for the foreseeable future.12. select an option Cost Constraint Going Concern Assumption Consistency Historical Cost Principle Economic Entity Assumption Monetary Unit Assumption Relevance Periodicity Assumption Materiality Comparability Faithful Representation Full Disclosure Principle Different companies use the same accounting principles.
Answer:
1. Monetary Unit Assumption: Items not easily quantified in dollar terms are not reported in the financial statements.
2. Faithful Representation: Accounting information must be complete, neutral, and free from error.
3. Economic Entity Assumption: Personal transactions are not mixed with the company's transactions.
4. Cost Constraint: The cost to provide information should be weighed against the benefit that users will gain from having the information available.
5. Consistency: A company's use of the same accounting principles from year to year.
6. Historical Cost Principle: Assets are recorded and reported at original purchase price.
7. Relevance: Accounting information should help users predict future events, and should confirm or correct prior expectations.
8. Periodicity Assumption: The life of a business can be divided into artificial segments of time.
9. Full Disclosure Principle: The reporting of all information that would make a difference to financial statement users.
10. Materiality: The judgment concerning whether an item's size makes it likely to influence a decision-maker.
11. Going Concern Assumption: Assumes a business will remain in operation for the foreseeable future.
12. Comparability: Different companies use the same accounting principles.