Question & Answer

How can the interaction of the multiplier and accelerator explain cyclical fluctuations in national income?

Twenty-five thousand shares reacquired by Elixir Corporation for $53 per share were exchanged for undeveloped land that has an appraised value of $1,700,000. At the time of the exchange, the common stock was trading at $62 per share on an organized exchange. Instructions (a) Prepare the journal entry to record the acquisition of land assuming that the purchase of the stock was originally recorded using the cost method. (b) Briefly identify the possible alternatives (including those that are totally unacceptable) for quantifying the cost of the land and briefly support your choice.

Trace through the effects on the foreign exchange market of a fall in the money supply.

Explain how convertible securities are determined to be potentially dilutive common shares and how those convertible securities that are not considered to be potentially dilutive common shares enter into the determination of earnings per share data.

Assume that Fielder Enterprises uses the following headings on its balance sheet. (a) Current assets. (f) Current liabilities. (b) Investments. (g) Long-term liabilities. (c) Property, plant, and equipment. (h) Capital stock. (d) Intangible assets. (i) Paid-in capital in excess of par. (e) Other assets. (j) Retained earnings. Instructions Indicate by letter how each of the following usually should be classified. If an item should appear in a note to the financial statements, use the letter “N” to indicate this fact. If an item need not be reported at all on the balance sheet, use the letter “X.” 1. Prepaid insurance. 2. Stock owned in affiliated companies. 3. Unearned service revenue. 4. Advances to suppliers. 5. Unearned rent revenue. 6. Preferred stock. 7. Additional paid-in capital on preferred stock. 8. Copyrights. 9. Petty cash fund. 10. Sales taxes payable. 11. Accrued interest on notes receivable. 12. Twenty-year issue of bonds payable that will mature within the next year. (No sinking fund exists, and refunding is not planned.) 13. Machinery retired from use and held for sale. 14. Fully depreciated machine still in use. 15. Accrued interest on bonds payable. 16. Salaries that company budget shows will be paid to employees within the next year. 17. Discount on bonds payable. (Assume related to bonds payable in item 12.) 18. Accumulated depreciation—buildings. 19. Noncontrolling interest.

Why should Bank of England determination of the rate of interest in the discount and repo markets also influence rates of interest in the parallel markets?

Nola, a tax novice, has a fairly simple tax question.  Besides tax services, what are some sources that she can use to answer her question?

Prepare a memorandum containing responses to the following items. (a) Describe the cost flow assumptions used in average-cost, FIFO, and LIFO methods of inventory valuation. (b) Distinguish between weighted-average-cost and moving-average-cost for inventory costing purposes. (c) Identify the effects on both the balance sheet and the income statement of using the LIFO method instead of the FIFO method for inventory costing purposes over a substantial time period when purchase prices of inventoriable items are rising. State why these effects take place.

Compare the relative merits of banning certain types of market structure with banning certain types of market behaviour.

Describe the accounting entry for a stock dividend, if any. Describe the accounting entry for a stock split, if any.

Why is the supply curve drawn as a vertical straight line in Figure 3.10?

Explain hedge funds’ motivation to rely on expert networks in recent years. (LO4)

As an illustration of the difficulty in identifying monopolies, try to decide which of the following are monopolies: BT; a local evening newspaper; food sold in a university outlet; a village post office; Interflora; the London Underground; ice creams in the cinema; Guinness; the board game ‘Monopoly’. (As you will quickly realise in each case, it depends how you define the industry.)

Assume that inflation depends on two things: the level of aggregate demand, indicated by the inverse of unemployment (1/U), and the expected rate of inflation (π et). Assume that the rate of inflation (πt) is given by the equation:                              πt = (48/U – 6) + πet Assume initially (year 0) that the actual and expected rate of inflation is zero. (a)  What is the current (natural) rate of unemployment   (b)    Now assume in year 1 that the government wishes to reduce unemployment to 4 per cent and continues to expand aggregate demand by as much as is necessary to achieve this. Fill in the rows for years 0 to 4 in the following table. It is assumed for simplicity that the expected rate of inflation in a given year (πet) is equal to the actual rate of inflation in the previous year (πt–1). (c)    Now assume in year 5 that the government, worried about rising inflation, reduces aggregate demand sufficiently to reduce inflation by 3 per cent in that year. What must the rate of unemployment be raised to in that year?   (d)    Assuming that unemployment stays at this high level, continue the table for years 5 to 7.

Andrews Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2014 are as follows. Future Employee Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2014, the company amended its pension plan, increasing its projected benefit obligation by $72,000. Instructions Compute the amount of prior service cost amortization for the years 2014 through 2019 using the years-ofservice method, setting up appropriate schedules.

In which country in Figure 11.5 would you expect to find the highest proportion of poor people? Describe how income is distributed in the two cases.

In a turning operation on plain carbon steel whose Brinell hardness = 275 HB, the cutting speed is set at 200 m/min and depth of cut = 6.0 mm. The lathe motor is rated at 25 kW, and its mechanical efficiency = 90%. Using the appropriate specific energy value from Table 21.2, determine the maximum feed that can be set for this operation. Use of a spreadsheet calculator is recommended for the iterative calculations required in this problem.

1.      : Do the clinical trials in the United States. Even though it will certainly be more expensive and time-consuming, you’ll feel as if you’re living up to the part of the Hippocratic oath that instructs you to “prescribe regimens for the good of my patients according to my ability and my judgment and never do harm to anyone.”

Use the information from BE7-2, assuming Restin Co. uses the net method to account for cash discounts. Prepare the required journal entries for Restin Co.

resented below are a number of balance sheet items for Montoya, Inc., for the current year, 2014. Goodwill $ 125,000 Accumulated depreciation—equipment $ 292,000 Payroll taxes payable 177,591 Inventory 239,800 Bonds payable 300,000 Rent payable (short-term) 45,000 Discount on bonds payable 15,000 Income taxes payable 98,362 Cash 360,000 Rent payable (long-term) 480,000 Land 480,000 Common stock, $1 par value 200,000 Notes receivable 445,700 Preferred stock, $10 par value 150,000 Notes payable (to banks) 265,000 Prepaid expenses 87,920 Accounts payable 490,000 Equipment 1,470,000 Retained earnings ? Equity investments (trading) 121,000 Income taxes receivable 97,630 Accumulated depreciation—buildings 270,200 Notes payable (long-term) 1,600,000 Buildings 1,640,000 Instructions Prepare a classified balance sheet in good form. Common stock authorized was 400,000 shares, and preferred stock authorized was 20,000 shares. Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of equity investments (trading) are the same.

Statements of Financial Accounting Concepts set forth financial accounting and reporting objectives and fundamentals that will be used by the Financial Accounting Standards Board in developing standards. Concepts Statement No. 6 defines various elements of financial statements. Instructions Answer the following questions based on SFAC No. 6. (a) Define and discuss the term “equity.” (b) What transactions or events change owners’ equity? (c) Define “investments by owners” and provide examples of this type of transaction. What financial statement element other than equity is typically affected by owner investments? (d) Define “distributions to owners” and provide examples of this type of transaction. What financial statement element other than equity is typically affected by distributions? (e) What are examples of changes within owners’ equity that do not change the total amount of owners’ equity?

In rolling of steel, what are the differences between a bloom, a slab, and a billet?

Aldina has identified conflicting authorities that address her research question.  How should she evaluate these authorities to make a conclusion?

Strategic plans; balanced scorecard measures for not-for-profit entity You have been invited by a classmate to help found a new not-for-profit organisation named Students Care. The organisation’s purpose is to provide scholarship money for children in Africa who have become orphans because of the AIDS epidemic. The organisation will operate only on campus, and the target donors are students. Suppose a wealthy businesswoman has offered to coordinate distribution of the scholarship funds to needy students, but wants to see a business plan for the organisation that describes the organisational vision and lists the core competencies, strategies, and operating plans.   Required (a)     Explain what each item on businesswoman’s list means. For each item, provide a possible example for Students Care. (b)     Consider the perspective of internal business processes. Your classmate wants to measure the number of hours per week that volunteers spend collecting donations, but you believe it should be dollars collected per volunteer hour spent in collection, measured on a weekly basis. Give one advantage and one disadvantage for each measure. (c)     You have had difficulty determining a measure of learning and growth, but a campus association recently organised a series of short workshops on improving student fundraising activities, as well as other aspects of governing student entities. Discuss the advantages and disadvantages of using the number of Students Care volunteers attending workshops as a measure for this perspective. (d)     Outline how the use of a strategy map might have been useful in the balanced scorecard process.

Why did Lehman Brothers experience financial problems during the credit crisis? (LO5)