At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account balance of $15,000 and accumulated E&P of $20,000 from a previous year as a C corporation. During the year, Nicolette (a 40 percent shareholder) received a $20,000 distribution (the remaining shareholders received $30.000 in distributions). (Assume her stock basis is $40,000 after considering her share of Bombay's income for the year but before considering the effects of the distribution.) Required: a. What is the amount and character of gain Nicolette must recognize from the distribution? b. What is her basis in her Bombay stock at the end of the year?

Answers

Answer 1

The amount and character of gain Nicolette must recognize from the distribution is $8000 and basis is $ 28000.

For $ 15000 distributions,

Given,

Accumulated adjustments account balance = $15000

Shareholder = 40%

To calculate, Distribution from 15,000 accumulated adjustments account

                                              = 15,000 *40%  

                                              = 6000 (This reduces her basis)

For $ 20000 distributions,

Given,

Accumulated adjustments account balance = $15000

Shareholder = 40%

To calculate, Distribution from 20,000 accumulated adjustments account

                                              = 20,000 *40%  

                                              = 8000 (This does not reduces her basis)

Final distribution = 20,000 - 6000 - 8000 = 6,000

This reduces her basis.

a. Dividend income = $8,000

Return on capital = $6,000 + $6,000 = $12,000

b. Basis = $40,000 - $6,000 - $6,000 = $28,000

Thus, Amount or dividend income is $8000 and basis is $28,000.

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Related Questions

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that
a. Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
b. Bond A was issued by the Exxon Mobil Corporation
and Bond B was issued by the state of New York.
c. Bond A has a term of 20 years and Bond B has a term of 1 year.
d. All of the above are correct.

Answers

All of the above options are correct regarding the two bonds having identical characteristics, the interest rate on bond A is expected to be higher than the interest rate on bond B.

What is the relationship between interest rates and bonds?

Bond prices are inversely related to interest rates. This means that when interest rates rise, bond prices fall, and when interest rates fall, bond prices rise.

Which bond do you think will pay the highest interest rate?

Long-term bonds are riskier than short-term bonds. Long-term bond holders have to wait longer for the principal to be repaid. To offset this risk, long-term bonds typically pay higher interest rates than short-term bonds.

What happens to bonds when interest rates rise?

Rate hikes can cause bond prices to fall. Income from municipal bonds is generally exempt from federal taxes, but may be subject to an alternative federal minimum tax (AMT) and state and local taxes.

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early inspections can . question 42 options: increase any further costs being spent on units that are already spoiled prevent any further conversion costs being wasted on units that are already good prevent any further costs being wasted on units that are already spoiled increase conversion costs on units that are already spoiled

Answers

Early inspections can increase conversion costs on units that are already spoiled.

The unit expenses of regular and odd spoilage are the equal whilst the 2 are detected on the equal inspection factor. The expenses of regular spoilage are normally covered as a element of the expenses of appropriate gadgets manufactured.

The value of spoiled gadgets is believed to same all expenses incurred in generating spoiled gadgets as much as the factor of inspection. - Spoilage expenses consequently range primarily based totally on exceptional inspection points.

In accounting, regular spoilage is covered withinside the fashionable value of goods, whilst odd spoilage is charged to cost as incurred. This method that the value of regular spoilage might also additionally to start with be recorded as an asset after which charged to cost in a later period.

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afb, inc. purchases a new delivery van which is expected to increase cash flows for the next 10 years. afb can finance the purchase with a standard 48-month vehicle loan, or by getting a 10-year loan from the bank. according to the hedging principle, afb should group of answer choices use the 10-year financing in order to match the cash flow stream from the asset with the financing repayments. use the 48-month loan since it matches the type of asset with the type of loan. use either type of financing, but hedge the risk in the options market. avoid using either loan and finance the truck with current cash reserves to avoid interest expense.

Answers

Match the asset's cash flow stream with the loan repayments by using the 10-year financing.

What is meant by financing repayments?The act of repayment is the process of returning money borrowed from a lender. The loan agreement sets forth in full the terms and conditions of repayment of the loan, including the applicable interest rate.Loans are often paid back in equal monthly installments (EMIs). The amount paid to the lender each month is represented by these payments. The principal amount and the interest on the principal amount are the two components, and both must be paid to the bank or lender on a specific date each month until the total amount owing has been paid back throughout the period of the loan term. Repayment of the loan in equal payments over a predetermined period of time, including any accumulated interest on the outstanding balance.Match the asset's cash flow stream with the loan repayments by using the 10-year financing.

The complete question is:

The purchase of a new delivery van by JoLi Corp. is anticipated to boost cash flows over the following ten years. JoLi offers two options for financing the purchase: a normal 48-month auto loan or a 10-year bank loan. The hedging principle states that JoLi should

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Euro credits feature rollover pricing.
O a. all of these answers
O b. none of these answers
O c.
Rollover pricing was created on Euro credits so that Euro banks do not end up paying more on Euro currency time deposits than
they earn from the loans.
O d. The lending rate on these Euro credits is stated as LIBOR + X percent, where X is the lending margin charged depending upon the
credit worthiness of the borrower. LIBOR is reset according to a set schedule
O
e.
Because of the rollover pricing feature, a Euro credit may be viewed as a series of shorter-term loans, where at the end of each time
period (generally three or six months), the loan is rolled over and the base lending rate is repriced to current LIBOR over the next
time interval of the loan.

Answers

In order to prevent European banks from having to pay more for time deposits in euros than they make on the loans, rollover pricing was introduced for Euro credits.

What is the price of the feature rollover for Euro credits?In order to prevent European banks from having to pay more for time deposits in the same currency than they are making back in loans, rollover pricing was developed for Euro credits.In order to prevent European banks from having to pay more for time deposits in euros than they make on the loans, rollover pricing was introduced for Euro credits.Lending in a currency other than the lending bank's own currency is referred to as "Eurocredit." The majority of the time, only major enterprises and governmental organizations apply for Eurocredit loans because of their size and duration.        

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using cell references enter a formula in cell b6 to calculate monthly payments for the loan omit the optional arguments

Answers

Following is the complete procedure to do the foresaid calculation in the Excel.

Click the Financial button and then PMT in the Function Library group of the Formulas tab. In the Rate argument box, type B3/12. In the Nper argument box, type B4. In the Pv argument box, type B2. Select OK.

Any excel spreadsheet, such as one created in Libre Office Calc or Microsoft Excel.

the following while your cursor is in cell B6.

In the function library group on the formulae tab,

pressed the financial button

then choose PMT.

In the rate argument box, type B3/12.

In the Nper argument box, type b4. In the argument box, type B2.

Hit "OK."

These presumptions were made:

In cell B3, the annual interest rate is kept.

payments are in cell B4

the cell-based loan amount is in B2

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concrete company agrees to lay a foundation for diamond properties, but fails to finish the job. diamond hires earth projects inc. to complete the work. in a suit for breach, diamond may recover from concrete

Answers

Concrete company agrees to lay a foundation for diamond properties.

What do you mean by Contract?

A legally enforceable agreement between two or more parties known as a contract establishes, clarifies, and regulates the parties' respective rights and obligations. The transfer of commodities, services, money, or a promise to transfer any of those at a later time are common components of contracts.a pledge made to another party stating whether they will or won't carry out a specific activity in the future. For instance, I'll give you $3,500 in exchange for your car. of oneself. In most cases, it reflects the conditions of the offer—a declaration made through words or deeds that both parties accept the terms of the contract.

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sffac no. 5 provides definition of the basic elements of accrual-based financial statements including which of the following?

Answers

The five basic elements of accrual-based financial statements as outlined in SFAC No. 5 include assets, liabilities, equity, revenue and expenses.

Assets are resources that are owned or controlled by an entity that are expected to produce economic benefits in the future. Assets can include things like cash, accounts receivable, inventory, and property, plant, and equipment.

Liabilities are obligations of an entity arising from past transactions or events that are expected to be paid in the future. Liabilities can include things like accounts payable, long-term debt, and accrued expenses.

Equity is the residual interest in the assets of an entity after the liabilities have been deducted. Equity can include things like common stock, retained earnings, and other comprehensive income.

Revenue is an increase in equity resulting from the sale of goods or services, the rendering of services, or the use of assets.

Expenses are decreases in equity resulting from the sale of goods or services, the rendering of services, or the use of assets. Expenses can include things like cost of goods sold, salaries and wages, depreciation, and interest expense.

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when writing off an uncollectible account under the allowance method, is credited, and is debited.

Answers

When writing off an uncollectible account under the allowance method allowance for doubtful accounts is debited, and accounts receivable  is credited at the end of the accounting period.

What Exactly Are Accounts That Are Uncollectible?

Receivables, loans, or other debts that have almost no possibility of being paid are referred to as uncollectible accounts. A debt may become uncollectible for a number of reasons, such as the debtor's bankruptcy, an inability to locate the debtor, the debtor's fraud, or the absence of adequate evidence to support the existence of the debt. Receivables, loans, and other financial obligations that a debtor will not pay are categorised as uncollectible accounts. Accounts that are uncollectible are due to the debtor's bankruptcy or reluctance to pay. The typical return term for goods offered on credit is between 30 and 90 days.

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If you are looking to expand your company's presence online internationally, which of the following should you consider with regards to your online content?
A . Translated by an automated tool only
B Translated but also locally adapted for the audience
C Translated into the native language
D Left the same, and not translated

Answers

The answer is (B) Translated but also locally adapted for the audience.

A company's website should be improved in terms of content and languages offered if it wishes to establish an international presence and increase its market.

The expansion of a website's presence into new international markets requires localization and adaptation so that the material not only corresponds to the audience's or user's native tongue but also takes into account the language's linguistic and cultural nuances.

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A provision in the California state constitution conflicts with a provision in the U.S. Constitution. If challenged.. no one. The Pennsylvania legislature enacts a state law that violates the U.S. Constitution.

Answers

A provision in the California state constitution conflicts with a provision in the U.S. Constitution. If challenged the U.S. Constitution, not the state provision, will be enforced.

What is constitution?

A state's constitution serves as its rulebook. It lays out the guiding ideals that the state is governed by. It provides an overview of the state's primary institutions and outlines their interrelationships

The Constitution outlines the three main federal government branches and their respective responsibilities. It also defines the fundamental law of the United States federal government. It is the oldest written national constitution still in use and has come to represent Western legal precedent.

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two researchers have identical models, data, coefficients and standard error estimates. they test the same hypothesis using a two-sided alternative, but researcher 1 uses a 5% size of test whiles researcher 2 uses a 10% test. which of the following statements is correct?
a) researcher 2 will use a larger critical value from the t-tables
b) researcher 2 will have a higher probability of type I error
c) researcher 1 will be more likely to reject the null hypothesis
d) both researchers will always reach the same conclusion.

Answers

Two researchers have identical models, data, coefficients and standard error estimates , both researchers will always reach the same conclusion.

What function do researchers serve?

Researchers have an obligation to share their findings, collaborate with others when needed, and transmit and use information for the good of their employer, the economy, and society at large. In the course of their research, researchers have an obligation to conduct themselves honestly and ethically.

What do scientists go by?

An individual who does scientific study to increase knowledge in a particular field is referred to as a scientist. There are various factors that encourage scientists to work. Many people want to know how the world came to be and why it is the way it is. They display a keen interest in reality.

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A contract with a person who has some sort of mental defect that prevents that person from being able to legally contract means that he lacks _____.
consideration
capacity
mens rea
promissory estoppel
actus reus

Answers

A contract with a person who has some sort of mental defect that prevents that person from being able to legally contract means that he lacks  promissory  estoppel.

What is meant by promissory estoppel ?

Promissory estoppel, which is a concept in contract law, is the theory that a party may recover based on a promise made if that party reasonably relied on the promise and the party seeking recovery adversely relied on the promise.

The promisee, the promisor, and the broken promise are the three essential elements required for promissory estoppel. When the promisee loses something because he relied on the promise but it was broken, this is considered unfair.

The equitable principle of promissory estoppel was developed by equity to stop injustice. According to the doctrine, if the promisee changes their mind while acting on the promise of the promisor, the promisor must rescind their agreement.

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he following partial balance sheet is provided for groom company: liabilities and stockholders' equity accounts payable

Answers

The debts-to-assets ratio for Groom Company is 37%.

What is the debts-to-assets ratio?

The debts-to-asset ratio is one of the financial leverage ratios that demonstrates the proportion of the company's assets contributed by creditors as opposed to the ratio contributed by the stockholders.

Creditors (outside owners of capital) and stockholders are the two financiers of the assets of an entity.

Liabilities and Stockholders' Equity:  

Accounts payable $7,900

Salaries payable  13,000

Bonds payable (Due in ten years) 23,000

Total liabilities = $43,900

Common stock, no par 27,700

Retained earnings 46,900

Total liabilities and stockholders' equity $118,500

Total assets = total liabilities and stockholders' equity = $118,500

Debt-to-assets ratio = total liabilities/total assets x 100

= 37.05% ($43,900/$118,500 x 100)

Thus, Groom Company's debt-to-assets ratio is 37%, showing that stockholders contribute 63% while creditors contribute 37% of the assets.

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Complete Question:

Liabilities and Stockholders' Equity  

Accounts payable $7,900

Salaries payable  13,000

Bonds payable (Due in ten years) 23,000

Common stock, no par 27,700

Retained earnings 46,900

Total liabilities and stockholders' equity $118,500

What is the company's debt-to-assets ratio?

​A _____ is a data validation rule that identifies values that are questionable, but not necessarily wrong.
a.
​reasonableness check
b.
​sequence check
c.
​range check
d.
​validity check

Answers

​A ​range check is a data validation rule that identifies values that are questionable, but not necessarily wrong.

Range checks are used to validate data that must fall within a specific range. There is a defined lower and higher boundary for reasonable values. For instance, a student in secondary school is most likely to be between the ages of 11 and 16. Only numbers from 11 to 16 can be programmed into the computer. A database validation technique is a range check. A range check verifies that data falls inside a predetermined range, between an upper and lower acceptable value. Even strings, dates, and numbers can benefit from range checks. A limit check compares a numerical amount to a predetermined amount. A range check determines whether a numerical value is inside a set lower and upper boundary. The input data will fit into the designated field thanks to a size check.

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if a u.s. multinational firm borrows euros for one year at 8% interest, and during the year the euro appreciates by 7% relative to the dollar, the approximate before-tax cost of this debt in dollar terms is

Answers

The approximate before-tax cost of this debt in dollar terms is Pre-Tax Cost of Debt = Annual Interest Expense ÷ Total Debt. This is the interest rate a company pays on its debt before cost any tax adjustments are made.

Companies borrow money by either issuing market bonds or taking out a bank loan. The cost of debt is the interest rate on new loans that the company must pay. The yield to maturity reflects the current required interest rate, whereas the coupon rate only reflects the required interest rate at the time the bond was issued. To calculate net debt, first add up all debt and cash and cash equivalents. The total cash or liquid assets are then subtracted from the total debt amount.

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true or false: A right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union.

Answers

It is true that a right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union.

States have the power to decide whether workers can be obliged to join a labor union in order to gain or keep a job under right-to-work laws.

Currently, workers have the option to join a union in 27 states plus Guam. Although unions are still allowed to exist in certain states, employees cannot be required to join as a condition of employment.20 states introduced right-to-work legislation during the 2014 legislative session, but no new right-to-work states were created. Tennessee passed a right-to-work law in 1947, making it the only state to do so. Any unit of government is prohibited under the 2014 law from passing laws or regulations that violate the rights provided by the National Labor Relations Act.

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After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000. What is the net realizable value of the accounts receivable?
Choose matching definition
a. 391,000
b. 340,000
c. 51,000
d. 289,000

Answers

Based on the given information, the net realizable value of the accounts receivable is 289,000. Thus the correct option is D.

What are accounts receivable?

The money that the corporation will receive from customers who have used credit to acquire its products and services is known as accounts receivable (AR).

The calculation for net realizable value is

Accounts Receivable = $340,000

Allowance for Doubtful Accounts= $51,000.

Net realizable value =A/c Receivable - Allowance for Doubtful accounts

                                 = $340,000 - $51,000

                                 =$289,000

Therefore, option D is appropriate.

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Companies within the same industry gather to present, demonstrate, and sell their merchandise at ______.

Answers

Sell their merchandise at a store

List some of the operations and functions in a company that are dependent on a forecast for product demand.

Answers

Production, inventory management, scheduling, facility placement, transportation and logistics, distribution, marketing, and quality control.

What is a company's straightforward definition?

A set of people can form new entity called a corporation to carry out and manage a business activity, whether it's the commercial or industrial. An entity could well be set up in a number of ways for tax and responsibility reasons depending on the laws in its jurisdiction.

Briefing:

These are some areas that marketing and quality control are related: Marketing aids in predicting demand and sales.

Quality management aids managers in hiring personnel to enhance production efficiency so that it meets consumer demand.

Because forecasting influences both the long-term and short-term market, management in every business management layer views it as a crucial and significant activity.

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the short-run macroeconomic equilibrium (or srme) occurs whenever the intersects the sras curve.

Answers

when the quantity of aggregate output furnished is equal to the extent of mixture output demanded; graphically, this is the price level and real GDP related with the intersection of the SRAS and AD curves.

Where does the short-run equilibrium occur?

Short-run equilibrium happens at the intersection of the combination demand curve with the short-run combination furnish curve. The short-run mixture provide curve relates the volume of complete output produced to the fee degree in the quick run. It is upward sloping because of wage and rate stickiness.

On a graph, this happens at the point the place the AD curve intersects the short-run common provide curve, precisely on the long-run aggregate supply curve.

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A group of university students buy coconuts from a farmers' market. The students consume the meat of the coconuts for food and use the shells to make sculptures. These sculptures are placed in a public park that any student can visit. The park sustains itself through students' donations.Some individuals have no incentive to donate to the park and will, instead depend on those who donate. this is an example of which of the following?

Answers

This is an example of a free rider problem.

The free rider problem is when people utilize or exploit a shared resource without contributing their fair part of the cost or without contributing anything at all. No matter how big or tiny a society is, the free rider issue might arise.

There are numerous instances of free rider issues. One typical instance is when someone continues to utilize public transportation despite not having paid for it. As a result, the service's quality may suffer, making it challenging for the supplier to continue offering it.

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which of the following is not generally involved in green marketing? developing products whose production, use or disposal is less harmful to the environment than the traditional versions of the product developing products that have a positive impact on the environment pricing products lower than the competition tying the purchase of a product to an environmental organization or event all of the above are involved in green marketing

Answers

Answer: Pricing products lower than the competition

Butchart Gardens is a very large garden in Victoria, British Columbia, renowned for its beautiful plants. It is so large that it could hold many times more visitors than currently visit it. The garden charges an admission fee of approximately $30. At this price, 1,000 people visit the garden each day.
Are visits to Butchart Gardens excludable or nonexcludable? Are they rival in consumption or nonrival? What type of good is it?
What do you think would happen to the number of visitors if the admission fee were reduced to $15? In your opinion, what is the socially optimal admission fee? Justify your answer.
Defend your views by citing information from the book, the Web and/or your own experiences. First, post your response on the discussion board, and then read and reply to the posts of at least two other students, citing those views with which you agree or disagree as well as your reasons for agreeing or disagreeing

Answers

As per the garden charges, the socially optimal admission fee is $2 per person.

Here we have given that Butchart Gardens is a very large garden in Victoria, British Columbia, renowned for its beautiful plants.

And it is so large that it could hold many times more visitors than currently visit it.

Here the garden charges an admission fee of approximately $30.

And in this price, there are 1,000 people visit the garden each day.

Here we need to find the socially optimal admission fee.

While we looking into the given question, we have identified that the following details are given,

Number of people per day = 1000

Admission fee = $30

Then the total fees collection is calculated as,

=> 30 x 1000

=> 30000

Then the optimal admission fee that is also known as the expected return is calculated as,

=> 30000/(15 x 1000)

=> 2 per person.

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Directing you to educational information and resources is one role of a______

Answers

Directing you to educational information and resources is one role of a guidance counsellor. Option B

Who is a guidance counsellor?

A guidance counselor is a specialist who works in educational settings like schools or universities and offers students academic, personal, and career guidance. They aid in the assessment of their pupils' potential abilities to raise their self-esteem and prepare them for success in their future undertakings.

The process of assisting people in discovering and developing their educational, vocational, and psychological potentialities in order to maximize their level of personal satisfaction and social usefulness is known as guidance counseling, also known as counseling and guidance.

There are five roles that a school counselor can play:

academic, career, behavioral, and aptitude.connecting point for teachers, parents, administrators, and students.preserve student records.Introduce outside organizations.Determine and resolve problems that interfere with education.

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which of the following are similarities between mutual funds and hedge funds? multiple choice question. they are regulated by the same statutes they hold assets and sell shares to investors they can pursue market neutral strategies

Answers

They hold assets and sell shares to investors among the following is the similarity between mutual funds and hedge funds.

What distinguishes hedge funds from mutual funds?

Mutual funds also offer modest entrance requirements for investors because the minimum investment amount is sometimes quite low. A hedge fund, on the other hand, is exclusively accessible to accredited investors. These people have high net worth, which means they make a lot of money or have a lot of money saved up.

Compared to hedge funds, are mutual funds more liquid?

Mutual funds have higher liquidity than hedge funds but less liquidity than ETFs. Of the three, hedge funds have the least liquidity. These have modest expense ratios. Investors must, however, pay brokerage fees, STT, and other costs to trade stocks on the stock exchange.

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Janet prefers cashews to almonds. She prefers macadamia nuts to peanuts, but she is indifferent between almonds and peanuts. Which of the following statements can we say for sure? Janet prefers macadamia nuts to almonds. Janet prefers almonds to macadamia nuts. Janet prefers cashews to macadamia nuts. Janet prefers peanuts to cashews.

Answers

The statement that can  be said for sure woiuld be that Janet prefers macadamia nuts to almonds. Option A

What is meant by preferences?

The quality of preferring one item or person over another: She prefers comfortable clothing to fashionable attire. I much like sweet cuisine than hot stuff. The selection of furniture is mostly a question of taste.

Preference is the ranking that an agent assigns to options based on their relative utility in economics and other social sciences. a procedure that yields the "best option" (whether real or theoretical). Preferences are assessments of values, usually in light of practical considerations.

Economists refer to everything we desire in life as "tastes and preferences." These preferences can be little, such as the toppings we enjoy on our pizza, or more significant.

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ch 2 kb. the predetermined manufacturing overhead rate is calculated by group of answer choices multiplying the predetermined moh rate by the actually allocation base factor multiplying the actual allocation base factor by the estimated annual moh dividing the annual estimated moh by the annual estimated moh allocation base multiplying the predetermined moh rate by the actual allocation base

Answers

The predetermined manufacturing overhead rate is calculated by dividing the annual estimated MOH by the annual estimated MOH allocation base.

Predetermined overhead rate is an estimated rate of the cost of manufacturing a product over a specific period of time. The overhead is the cost associated with the manufacturing of a product such as facility maintenance, facility utilities, supplies, equipment, and labor costs. To calculate the predetermined overhead rate for a specific period of time, for example, a fiscal year, the estimated predetermined overhead cost is divided by an allocation base, such as direct labor costs, direct labor dollars, or number of machine-hours. Indirect labor costs, such as executive or supervisor salaries or any labor not related to the physical manufacturing of the product, would not be used in the manufacturing overhead rate.

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The residents of Ireland earn $200 million of income from abroad. Residents of other countries earn $300 million in Ireland. Therefore, Ireland's:
a. net factor payments from abroad are positive, and its GDP is larger than its GNP
b. net factor payments from abroad are positive, and its GNP is larger than its GDP
c. net factor payments from abroad are negative, and its GDP is larger than its GNP
d. net factor payments from abroad are negative, and its GNP is larger than its GDP

Answers

Ireland's citizens bring in $200 million from abroad. $300 million is made in Ireland by foreign nationals. Ireland's GDP is higher than its GNP, and as a result, its net factor payments from abroad are negative.

What is the phrase used to describe the revenue received by people and non-corporate businesses?

Individual Income. Personal income is the revenue received by households and unincorporated enterprises.

Why do income and spending in an economy have the same value?

Income and spending in an economy as a whole must be equal because: Every transaction involves a buyer and a seller. Every dollar that a buyer spends is a dollar that a seller makes. A measure of an economy's revenue and outlays is called the gross domestic product (GDP).

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If overall interest rates in the economy rise, a corporate bond with a fixed interest rate will generally: A. increase in value. B. decrease in value. C. remain unchanged. D. become worthless.

Answers

A corporate bond with a set interest rate will often decrease in value if broader economic interest rates increase. Option (b) is Correct.

For the duration of their terms, many bonds pay a fixed rate of interest. The term "coupon rate" refers to the interest rate as well as the term "coupon payments" for interest payments. If the coupon rate is fixed, it doesn't matter if the market interest rate changes; the coupon payments remain the same. A bond's price may decline when interest rates rise. The federal alternative minimum tax (AMT), state taxes, and local taxes may apply to municipal bond income, which is often exempt from federal taxes.

Interest rates and bond prices are inversely correlated. Accordingly, bond prices decrease as interest rates rise and increase when interest rates fall. Bond prices decline as interest rates increase, while bond prices increase when interest rates decline. Its official name is "weighted average maturity of cash flows." Its simple definition is the price's sensitivity to interest rate movements. Your duration decreases if your cash flows happen more quickly or earlier, and vice versa.

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Suppose, at a given point in time, Louie's Lute Lair is selling lutes in a perfectly competitive market and is producing at a level of output where price is less than marginal cost. Everything else held constant, Louie can increase his firm's profits by the quantity of lutes he produces and the price he charges for them. Select one: A. notchanging; increasing B. decreasing decreasing c. decreasingsincreasing. D. not changing; decreasing E. increasing; increasing F. increasing; decreasing G. increasing; not changing H. decreasing: not changing

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The correct option is E. increasing, increasing.  In a perfectly competitive market, Louie's Lute Lair is producing at a level of output where price is less than marginal cost. This means that Louie is incurring losses at the current level of production. In order to increase his firm's profits, Louie has to increase the quantity of lutes he produces and the price he charges for them.

Increasing the quantity of lutes produced will result in an increase in revenue, as Louie will receive more money for each lute sold. At the same time, increasing the price of lutes will increase the profit margin on each lute sold, since the cost of producing the lute remains the same regardless of the price charged.

By increasing the quantity of lutes he produces and the price he charges for them, Louie is able to increase his firm's profits. However, this increase will be limited by the fact that the market is competitive. If Louie increases his price too much, he will be undercut by his competitors, resulting in fewer lutes sold and lower profits for him. Therefore, it is important for Louie to find the optimal balance between quantity and price in order to maximize his profits.

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