A liability refers to any amount or debt that a firm or an individual owes, often arising from past transactions where assets were borrowed under the agreement of a future payback.
It can be seen as an obligation that the entity must fulfill in the future using their assets. A liability is often the result of a past transaction or event, where the entity has agreed to borrow assets and pay a certain rate of return.
Liabilities can be both short-term, such as accounts payable, or long-term, such as long-term debt. It is important for businesses and individuals to manage their liabilities effectively to maintain financial stability.
For example, a bank loan that a company uses to invest in new equipment would be considered a liability, as it represents an amount that the company is obligated to repay in the future.
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Answer:
The state of being responsible for something, especially by law
Answer: a. Investors
In a enviroment where there are investors, there will always be the possibility of companies arising because investors want to grow their profits and they do it through participations bought in companies, they also invest in loans made in companies and this propitiates the figure of the investor that means a person or an entity that places a value that belongs to him, to finance or to acquire a good.
For example, an investment fund acquires a company to grow it and then sell it at a higher price. This is a typical transaction of an investment fund and encourages the creation of new companies or their expansion.
b. Find the price and P/E ratio of the firm if the plowback ratio is reduced to 0.20.
Answer:
a. Earnings per share = $5
Expected dividend per share(D1) = 70% x $5 = $3.50
Current market price(Po) = D1/Ke - g
Current market price(Po) = $3.50/0.12-0.06
Po = $3.50/0.06
Po = $58.33
Growth rate(g) = b x r
= 0.3 x 0.2
= 0.06
Price-earnings(P/E) ratio = market price per share/Earnings per share
= 58.33/5
= 11.67
b. Earnings per share = $5
D1 = 80% x $5 = $4
Po = D1/Ke - g
Po = $4/0.12-0.04
Po = $50
g = b x r
g = 0.2 x 0.2
g = 0.04
P/E ratio = $50/$5
P/E ratio = 10
Explanation:
In this question, there is need to determine the growth rate, which is a function of return on investment and plowback ratio. Then, we will calculate the current market price as shown above. Finally, the current market price is divided by earnings per share in order to obtain the P/E ratio.
Answer:
The correct answer is B: $384,000
Explanation:
Giving the following information:
Blakely charges manufacturing overhead to products by using a predetermined application rate computed based on machine hours.
The following data pertain to the current year:
Budgeted manufacturing overhead: $480,000
Actual manufacturing overhead: $440,000
Budgeted machine hours: 20,000
Actual machine hours: 16,000
First, we need to calculate the manufacturing overhead rate:
manufacturing overhead rate= total estimated manufacturing overhead/ total amount of allocation base
manufacturing overhead rate= 480000/20000= 424 per hour
Allocated manufacturing overhead= overhead rate*actual hours= 24*16000= 384,000
Answer:
12.8%
Explanation:
Data provided in the question:
Debt = 60% = 0.60
Equity = 40% = 0.40
Cost of debt, kd = 10% = 0.10
cost of equity, ke = 17% = 0.17
Now,
firm weight average cost of capital
= ( ke × weight of equity ) + ( kd × weight of debt )
on substituting the respective values, we get
= ( 0.17 × 0.40 ) + ( 0.10 × 0.60 )
= 0.068 + 0.06
= 0.128
or
= 0.128 × 100%
= 12.8%
Answer:
using supplies
Explanation:
An expense can be described as cost incurred by a company in a bid to earn revenue.
When supplies are used no explicit cost is incurred in the process so it doesn't qualify as an expense.
I hope my answer helps you
Expenses include making a payment on account, using supplies, and paying wages for production workers for work performed during the current period.
However, paying for electricity used during the current period is not considered an expense. Instead, it is categorized as an operating cost or utility cost.
Expenses typically refer to the costs incurred by a business in its day-to-day operations, such as purchasing inventory, paying wages, or using supplies.
Read more about Expenses here:
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Requirements:
a. What accounting action should Aquarium take in this situation?
b. Give any journal entry required.
c. At what amount should Aquarium report Inventory on the balance? sheet?
d. At what amount should the company report Cost of Goods Sold on the income? statement?
e. Discuss the accounting principle or concept that is most relevant to this situation.
Answer:
a. What accounting action should Aquarium take in this situation?
the balance of inventory account should decrease to match the replacement cost.
b. Give any journal entry required.
Dr Cost of goods sold 75,000
Cr Inventory 75,000
c. At what amount should Aquarium report Inventory on the balance? sheet?
Inventory = $200,000 - $75,000 = $125,000
d. At what amount should the company report Cost of Goods Sold on the income statement?
Cost of goods sold = $820,000 + $75,000 = $895,000
e. Discuss the accounting principle or concept that is most relevant to this situation.
US GAAP states that companies must use the lower of cost or market rule, which means that inventory must be recognized at the lowest cost either original purchase cost or market value.