Multiple Choice Depreciation is a non cash item on the income statement. Generally accepted accounting principles (GAAP) require that income is reported when it is earned, even though no cash fi may have occured.
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![When analyzing an income statement, which of the following statements is true?
Multiple Choice
Depreciation is a non cash item on the income statement.
Generally accepted accounting principles (GAAP) require that income is reported when it is earned, even though no cash flow
may have occured.
Jhy
Companies try ot make costs variable with sales as much as possible](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64b639f4-5469-4955-a5d8-3753034fd474%2F6f149fdf-d6a3-44b8-9566-d8312adcd4cf%2F55ow1oi_processed.jpeg&w=3840&q=75)
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- Listed below are several information characteristics and accounting principles and assumptions. Match the letter of each with the appropriate phrase that states its application. (Items a through k may be used more than once or not at all.) Economic entity assumption g. Matching principle Going concern assumption h. Full disclosure principle Monetary unit assumption i. Relevance characteristic Periodicity assumption j. Reliability characteristic Historical cost principle k. Consistency characteristic Revenue recognition principle ____ 1. Stable-dollar assumption (do not use historical cost principle). ____ 2. Earning process completed and realized or realizable. ____ 3. Presentation of error-free information with representational faithfulness. ____ 4. Yearly financial reports. ____ 5. Accruals and deferrals in the adjusting and closing process. (Do not use going concern.) ____ 6. Useful standard measuring unit for business…Please show your solution in good accounting form. Thank you! Disregard the computation of the amount remitted. REQUIRED: COMPUTE FOR THE CONSIGNMENT PROFITT o p i c : F o r e c a s t i n g T e c h n i q u e s Why does the presence of fixed costs cause the percent-of-sales method of pro forma income statement preparation to fail? What is a better method? Describe the judgmental approach for simplified preparation of the pro forma balance sheet. T o p i c : F i n a n c i n g O p e r a t i o n s a n d E x p a n s i o n W h a t a r e t h e n e t p r o c e e d s f r o m t h e s a l e o f a b o n d ? W h a t a r e f l o t a t i o n c o s t s , a n d h o w d o t h e y a f f e c t a b o n d ’ s n e t p r o c e e d s ? W h a t p r e m i s e a b o u t s h a r e v a l u e u n d e r l i e s t h e c o n s t a n t - g r o w t h v a l u a t i o n ( G o r d o n g r o w t h ) m o d e l t h a t i s u s e d t o m e a s u r e t h e c o s t o f c o m m o n s t o c k e q u i t y , r s ? H o w d o t h e c o n s t a n t - g r o w t…
- Which method results in a more realistic amount for income because it matches the most current costs against revenue? a.FIFO b.Weighted average cost c.Specific identification d.LIFOOn a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the difference represents Select one: O A. a positive return on the investment O B. a net loss O C. net income O D. not enough information is presentedChoose the best answer for each of the following multiple-choice questions.1. Cost-volume-profit analysis includes some simplifying assumptions. Which of thefollowing is not one of these assumptions?a. Cost and revenues are predictable.b. Cost and revenues are linear over the relevant range.c. Changes in beginning and ending inventory levels are insignificant in amount.d. Sales mix changes are irrelevant. 2. The term relevant range, as used in cost accounting, means the rangea. over which costs may fluctuateb. over which cost relationships are validc. of probable productiond. over which production has occurred in the past 10 years3. How would the following be used in calculating the number of units that must besold to earn a targeted operating income? Price per unit Targeted operating income Denominator Numerator Numerator Numerator Not used Denominator Numerator Denominator 4. Information concerning Korian Corporation’s product is as follows: Sales $300,000 Variable…
- Traditional accounting systems record only actual transac-tions. As a result, how can opportunity costs be important in incremental decisions?Below is the information on a project that you are evaluating for deciding on its worthiness as an investment. ABC company is considering a new investment whose data are shown below. WACC for the project under consideration Net investment in fixed assets (immediate) Required new working capital (immediate) Working capital from the end of the first year onwards as a Percentage of Sales Straight line deprec. Rate (every year end from the end of year 1} Sales revenues (starting at the end of year 1) Operating cost excluding depreciation, (starting at the end of year 1) 10% 75000 15000 25% 33.33% 75000 25000 Tax Rate Annual increase in Operating Costs each year from year 2 onwards Annual increase in Sales revenue from the end of the year 2 onwards Depreciation: Fixed assets to be fully depreciated in books using the straight line method over 4 years to zero Salvage value of the fixed assets at the end of the project life 35% 6% 9750Managers have some flexibility in setting the estimated useful lives of depreciable assets. Explain how this could allow managers to manipulate earnings. Would depreciation be considered a variable cost or a fixed cost? Explain how a change in sales price, variable cost, or fixed cost affects breakeven in units and breakeven in sales.
- If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that write-down affect the company's financial statements? Multiple Choice Total assets will decrease. Net income will increase. Net income and total assets will both decrease. Gross margin will decrease.Which of the following is not a correct definition of the breakeven point? A.the point where total profits equals total fixed expenses B.the point where total profit equals zero C.the point where total contribution margin equals total fixed expenses D.the point where total sales equals total expensesWhich of the following statements about accounting income and economic income is (are) correct? I. Accounting income ignores many unrealized gains/losses of assets and liabilities, but economic income fully recognizes unrealized gains/losses. II. Accounting income does not consider all the costs (e.g., opportunity costs), whereas economic income account for all types of costs. III. Income and capital gains/losses are treated different in the calculation of accounting income, while they are treated the same in the calculation of economic income. Group of answer choices a.I and II b. I and III c. II and III d. I, II and III
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