In its first year of operations, Gomes Company recognized $28,000 in service revenue, $6,000 of which was on account and still outstanding at year-end. The remaining $22,000 was received in cash from customers. The company incurred operating expenses of $15, 800. Of these expenses, $12,000 were paid in cash; $3, 800 was still owed on account at year-end. In addition, Gomes prepaid $2, 400 for insurance coverage that would not be used until the second year of operations. (a) Calculate the first year's net earnings under the cash basis of accounting, and calculate the first year's net earnings under the basis of accounting.
(b) Which basis of accounting (cash or accrual) provides more useful information for decision-makers?

Answers

Answer 1

Answer:

Answer:

a. The first year's net earnings under the cash basis of accounting is $7,600 and the first year's net earnings under the basis of accounting is $12,200

b. Accrual basis of accounting provides more useful information.

Explanation:

a. In order to calculate the first year's net earnings under the cash basis of accounting we would have to use the following formula:

Cash basis net earnings = Service revenue (Cash) – Cash expenses – Prepaid expenses

Cash basis net earnings =$22,000 – $12,000 – $2,400

Cash basis net earnings =$7,600

In order to calculate the first year's net earnings under the the basis of accounting we would have to use the following formula:

Accrual basis net earnings = Service revenue – Operating expenses incurred

Accrual basis net earnings= $28,000 – $15,800

Accrual basis net earnings=$12,200

b. Accrual basis of accounting provides more useful information, because in this system revenues are recorded what actually earned and expenses are recorded what actually incurred for earning such revenues. Therefore, it gives better profit picture

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External setup time refers to:______________. a. The time it takes workers to set up a machine during scheduled maintenance
b.The time to complete setup activities that do not require that the machine be stopped
c.The time it takes equipment vendors to set up the machine
d. None of the above

Answers

Answer: The correct answer is "b.The time to complete setup activities that do not require that the machine be stopped".

Explanation: External setup time refers to the time to complete setup activities that do not require that the machine be stopped.

External setup is the term used to refer to when workers can perform maintenance without stopping the production process. The term "external" is used because maintenance can be performed "external" to the production process.

Learning curves are useful for measuring work improvement for repetitive, simple jobs requiring short times to complete.a) true
b) false

Answers

Final answer:

Learning curves are indeed useful for measuring work improvement in repetitive, simple tasks. They represent worker improvement in efficiency and reduction in mistakes over time, as these tasks are completed on a repetitive basis.

Explanation:

The statement, 'Learning curves are useful for measuring work improvement for repetitive, simple jobs requiring short times to complete', is true. A learning curve is a concept that represents improvement in efficiency of production as workers increase in skill through repetition of tasks. This concept is often used in business and economics to measure work improvement, particularly for jobs that are simple and repetitive in nature. For instance, when an assembly line worker repeats the same task over and over, they typically become faster and make fewer mistakes over time, thus increasing productivity.

Learn more about Learning Curve here:

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False. Learning curves have limited application for assembly-lines with short, repetitive jobs.

1. What is the ending balance in the accounts listed below given the following transactions: a. RWV borrows $1,100,000 in the form of a note payable. b. RWV purchases land for $250,000. c. RWV builds a building for $750,000. d. RWV orders $7,500 worth of food, which will be paid for later. e. RWV provides services worth $95,000, and will bill for the services later. f. RWV pays salaries to employees totaling $45,000. g. RWV pays $7,500 towards the food it previously ordered. h. RWV uses $5,000 worth of food. i. RWV pays $17,000 of G

Answers

Answer:

RWV

Ending Account Balances:

Account Details Debit Credit

Notes Payable $1,100,000

Cash $30,500

Land 250,000

Building 750,000

Supplies (Food) 2,500

Accounts Receivable 95,000

Service Revenue 95,000

Salaries Expense 45,000

Supplies (Food) Exp. 5,000

G 17,000

Totals $1,195,000 $1,195,000

Explanation:

a) Notes Payable

Account Details Debit Credit

Cash $1,100,000

a) Cash Account

Account Details Debit Credit

Notes Payable $1,100,000

Land (b) $250,000

Building (c) 750,000

Salaries (f) 45,000

Supplies (Food) (g) 7,500

G (i) 17,000

Balance c/d $30,500

b) Land

Account Details Debit Credit

Cash $250,000

c) Building

Account Details Debit Credit

Cash $750,000

d) Supplies (Food)

Account Details Debit Credit

Accounts Payable $7,500

Supplies (Food) Expense (h) $5,000

Balance c/d $2,500

Accounts Payable

Account Details Debit Credit

Supplies (d) $7,500

Cash (g) $7,500

e) Accounts Receivable

Account Details Debit Credit

Service Revenue $95,000

Service Revenue

Account Details Debit Credit

Accounts Receivable (e) $95,000

f) Salaries Expense

Account Details Debit Credit

Cash $45,000

h) Supplies (Food) Expense

Account Details Debit Credit

Supplies (Food) $5,000

i) G

Account Details Debit Credit

Cash $17,000

What insight does ROI give into investment performance? Is it acceptable to lose profit on one product, if that product is vital to the sale of an extremely profitable product? Why?

Answers

Answer:

Explanation:

Return on investment (ROI) can be defined as a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of investments.

The ability to calculate return on investment is particularly valuable for any business regardless of its size or industry. by calculating ROI, an individual can understand how well their business is doing and which areas needs improvement.

Every business decision requires knowldge of ROI, so as to optimize profitability. Yes it is acceptable to loose profit of one product for the sale of a profitable product because the gain that would be derived by selling an extremely profitable products is better for the company that the gain one product will derive. Afterall, every company wants to increase profitability.

If there is a market with the below noted market segmentation, what would the four firm market concentration ratio be?Distribution of sales: 30%, 3%,10%, 5%,15%, 2%, 35%

a. 10
b. 90
c. 50
d. 40

Answers

Answer:

The correct answer is:

90 (b.)

Explanation:

A concentration ratio is the ratio of the combined market shares percentage held by the largest specified number of firms, compared to the given market size. The concentration ratio ranges from 0% to 100%. If the concentration ratio of an industry ranges from 0% to 50%, that industry is said to be perfectly competitive if the top 5 firms have a concentration ratio of 60% or more, oligopoly is said to occur, and if the competition ratio of one company is 100% it shows monopoly.

In our example, the concentration of the largest four market segments are:

35%, 30%, 15% and 10%

Therefore, the four firm market concentration ratio = 35 + 30 + 15 + 10 = 90

Answer:

b. 90

Explanation:

The concentration ratio is a term in business that is measured as the total summation of the market share percentage carried by the largest specified number of companies in an industry. The concentration ratio varies between 0% to 100%, and an industry's concentration ratio is considered to demonstrates the extent of competition in the industry.

However, the four-firm concentration ratio is calculated by summing the market shares—that is, the percentage of total sales—of the four largest companies in the given market.

Hence, in this case, we have 35%, 30%, 15% and 10% as the top four largest market share. There by, summation equals => 35+30+15+10 = 90.

Newark Company has provided the following information: Cash sales, $500,000 Credit sales, $1,400,000 Selling and administrative expenses, $380,000 Sales returns and allowances, $95,000 Gross profit, $1,410,000 Increase in accounts receivable, $60,000 Bad debt expense, $38,000 Sales discounts, $48,000 Net income, $1,030,000 How much cash was collected from customers

Answers

Answer:

$1,840,000

Explanation:

The computation of the cash collected from customers is shown below:

Cash collected from customers = Cash sales + credit sales - increase in account receivable

= $500,000 + $1,400,000 - $60,000

= $1,900,000 - $60,000

= $1,840,000

By adding the cash sales, credit sales and deduct the increase in account receivable we can get the cash collected from customers and the same is shown above

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