Question & Answer

What is the nature of interest? Distinguish between “simple interest” and “compound interest.”

Explain why stocks traded on the New York Stock Exchange generally exhibit less risk than stocks that are traded on other exchanges. (LO5)

Indicate whether the following items are capitalized or expensed in the current year. (a) Purchase cost of a patent from a competitor. (b) Research costs. (c) Development costs (after achieving economic viability). (d) Organizational costs. (e) Costs incurred internally to create goodwill.

Ten interrelated elements that are most directly related to measuring the performance and financial status of an enterprise are provided below. Assets Distributions to owners Expenses Liabilities Comprehensive income Gains Equity Revenues Losses Investments by owners Instructions Identify the element or elements associated with the 12 items below. (a) Arises from peripheral or incidental transactions. (b) Obligation to transfer resources arising from a past transaction. (c) Increases ownership interest. (d) Declares and pays cash dividends to owners. (e) Increases in net assets in a period from nonowner sources. (f) Items characterized by service potential or future economic benefit. (g) Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners. (h) Arises from income statement activities that constitute the entity’s ongoing major or central operations. (i) Residual interest in the assets of the enterprise after deducting its liabilities. (j) Increases assets during a period through sale of product. (k) Decreases assets during the period by purchasing the company’s own stock. (l) Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners.

] Rebecca is a calendar-year taxpayer who operates a business. She made the following business-related expenditures in December of this year. Indicate the amount of these payments that she may deduct this year under both the cash method of accounting and the accrual method of accounting.  a) $2,000 for an accountant to evaluate the accounting system of Rebecca’s business. The accountant spent three weeks in January of next year working on the evaluation. b) $2,500 for new office furniture. The furniture was delivered on January 15 of next year.  c) $3,000 for property taxes on her factory.  d) $1,500 for interest on a short-term bank loan relating to the period from November 1 of this year through March 31 of next year.

For a certain metal, the strength coefficient = 700 MPa and strain-hardening exponent = 0.27. Determine the average flow stress that the metal experiences if it is subjected to a stress that is equal to its strength coefficient K.

Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its stockholders and the Securities and Exchange Commission (SEC) at the end of the first quarter of the 2014–2015 fiscal year. Snider’s financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year. Sales revenue $60,000,000 Cost of goods sold 36,000,000 Variable selling expenses 1,000,000 Fixed selling expenses 3,000,000 Included in the fixed selling expenses was the single lump-sum payment of $2,000,000 for television advertisements for the entire year. Instructions (a) Snider Corporation must issue its quarterly financial statements in accordance with generally accepted accounting principles regarding interim financial reporting. (1) Explain whether Snider should report its operating results for the quarter as if the quarter were a separate reporting period in and of itself, or as if the quarter were an integral part of the annual reporting period. (2) State how the sales revenue, cost of goods sold, and fixed selling expenses would be reflected in Snider Corporation’s quarterly report prepared for the first quarter of the 2014–2015 fiscal year. Briefly justify your presentation. (b) What financial information, as a minimum, must Snider Corporation disclose to its stockholders in its quarterly reports?

Consider a life insurance company that needs to ensure that it can make a steady stream of payments over time to beneficiaries of its policyholders. Assume that the compensation for the insurance company’s portfolio managers is tied to the return earned on the investments each year. Write a short essay that explains how the compensation plan might lead to investment strategies that do not serve the needs of the policyholders.

On a diagram similar to Figure 7.4, show the long-run equilibrium for both firm and industry under perfect competition. Now assume that the demand for the product falls. Show the short-run and long-run effects.

What is the purpose of using a coolant in the grinding process?

Why do costs tend to increase when better surface finish is required on a machined part?

Adoption of fintech has occasionally resulted in cheaper financial service costs and more accessible financial goods and services. On the other hand, others could counter that adopting fintech comes with a cost because it necessitates owning cutting-edge technology that not everyone can afford. Do you think the financial system will be more inclusive as a result of fintech adoption, or will some marginalized groups still not be able to access those services? (LO1, LO4)

Four years after issue, debentures with a face value of $1,000,000 and book value of $960,000 are tendered for conversion into 80,000 shares of common stock immediately after an interest payment date. At that time, the market price of the debentures is 104, and the common stock is selling at $14 per share (par value $10). The company records the conversion as follows. Bonds Payable 1,000,000 Discount on Bonds Payable 40,000 Common Stock 800,000 Paid-in Capital in Excess of Par— Common Stock 160,000 Discuss the propriety of this accounting treatment.

1.      : Prepare a memo to Taandil summarizing the new safety guidelines that affect the Lion Cub product line and requesting his authorization for implementation.

What is the difference between machine welding and automatic welding?

: Explain the difference between intrinsic and extrinsic rewards.

Explain how and why the use of ROI for performance evaluation can cause managers to make decisions that could be harmful to an entity in the long run.

What is the main difference between the press-and-blow and the blow-and-blow shaping processes in glassworking?

What is the difference between a sales tax and a use tax?

In the previous problem, suppose that the percent reduction were specified to be equal for each pass, rather than the draft. (a) What is the minimum number of passes required? (b) What is the draft for each pass?

On December 31, 2014, Alexander Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2015. On January 21, 2015, the company issued 25,000 ordinary shares for $36 per share, receiving $900,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2015, the proceeds from the share sale, supplemented by an additional $300,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2014, statement of financial position is authorized for issue on February 23, 2015. Instructions Show how the $1,200,000 of short-term debt should be presented on the December 31, 2014, statement of financial position.

‘As volume increases, total cost increases and per-unit cost decreases.’ What type of linear cost function does this describe? Draw a simple graph of this type of cost function.

What are the three methods of performing the masking step in chemical machining?

How does creep feed grinding differ from conventional grinding?

Try to formulate a definition of ‘the public interest’.