Finance Questions
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Determine the depreciation on the building using straight-line depreciation. Assume that the useful life is x and the residual value is x amount
Using the alternative treatment, if an amount is still left in service revenue that is not earned by the end of the accounting period, it must be adjusted and transferred from Service Revenue to...
The company pays interest on its $10000, 4% note payable of $33 on the first day of each month33 would be the amount used for the adjustment
The major difference between a cash basis accounting system and an accrual basis accounting system is the timing of recording revenues and assets
Business receives $4000 on January 1 for 10 month service contract for the period of January 1 through October 31(Principal Amount / Contract Length) = Monthly Revenue(4000 / 10) = 400 per month for 10 months
Taylor Company prepaid three months of insurance totaling $2,000 on December 1 of the current year. Assuming Taylor records deferred expenses using the alternative treatment, what would be the entry on December 1?
Total salaries for all employees is $3500 per month. Employees are paid on the 1st and 15thTwo pay periods, one pay period falls out of the month so it needs to be accrued for next months trial balance(3500 / 2) = 1750 per pay period1750 would be the amount used for adjustment
The key differences between the cash basis and accrual basis of accounting can be explained by understanding the time period concept and the revenue recognition and matching principles
Adjusting entries either credit a revenue account or debit an expense account
The accrual basis accounting method gives the best picture of earning because revenues are recorded when earned and expenses are recorded when incurred
Office Supplies on hand, x amount(This adjustment is stating the amount of office supplies left so that means:Unadjusted Trial Balance Office Supplies - X Amount = Supplies Expense
What is firm equity a function of?
What do equity holders demand as the debt-financing increases the financial risk?
Return on equity of an unlettered firm (ie, firm with zero debt)
T/F: The debt-equity ratio has no effect on the firm value
The greater the risk of financial distress, the (more/less) debt will be optimal for the firm
What does an increased use of cheaper debt financing imply about WACC?
WACC should (increase/decrease) as the firm is increasingly relying on the debt financing which is cheaper than the equity financing
What happens to the tax shield as the unlevered firm introduces D>0?
T/F: Market values always exceeds book value