Answer with its Explanation:
Here, there are two case scenario depending upon the payment related to my services. The credit union will either pay through the debtor's estate or will pay independent of court.
Now, if the credit union is willing to pay me out of debtor's estate then the offer must be declined as the court order is mandatory here for investigating any irregularities. Furthermore, the order will also define my role and responsibilities and duties associated with the investigation task.
Now on the other hand, if the credit union is of the opinion that they will pay independent of court then I will accept their offer and will offer my investigation services on my own terms and conditions.
On July 1, Shady Creek Resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each June 30 of $37,258. What amount of principal will be included in the first annual payment
Answer:
Principal payable in year 1 = $17,258
Explanation:
Loan Amortization: A loan repayment method structured such that a series of equal periodic installments will be paid for certain number of periods to offset both the loan principal amount and the accrued interest.
The annual installment is computed as follows:
Annual installment= Loan amount/annuity factor .
The annual installment is already given as 37,258.
Principal payable = Annual installment - interest amount
Interest amount = Interest rate × loan amount
= 8%× 250,000 =20,000
Principal payable in year 1 =37,258 - 20,000 =$17,258
Principal payable in year 1 = $17,258
Iron Works International is considering a project that will produce annual cash flows of $38,200, $46,900, $57,600, and $23,100 over the next four years, respectively. What is the internal rate of return if the project has an initial cost of $112,800
Answer:
18.11%
Explanation:
The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.
IRR can be calculated using a financial calculator
Cash flow in year 0 = $-112,800
Cash flow in year 1 = $38,200
Cash flow in year 2 = $46,900
Cash flow in year 3 =$57,600
Cash flow in year 4 =$23,100
IRR = 18.11%
To find the IRR using a financial calacutor:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. After inputting all the cash flows, press the IRR button and then press the compute button.
Why doesn’t the fact that the ‘’Inflation solution" is only a temporary solution to stop many developing countries from using it?
Explanation:
Remember, inflation is scenario in an economy in which there occurs a constant rise in the prices of commodities/services in the market, which may lead to a reduction of the money in circulation.
Although, developing countries could use alternative approaches such as taxation or cutting down government expenditure, they do not use this but prefer "inflation solution" because it appears to be the easy way out.
Since, taxes are always lesser than required to run the economies of developing countries they (the government) may not use this approach.
Question 3 (2 points)
Which of the following is NOT a way to balance a project?
..
O At the Enterprise Level
At the Business Case Level
.
O At the Program Level
At the Project Level
Answer:
1
Explanation:
at the bisiness casel level
The most effective method for finding shopping center tenants is:__________.a. personal contactb. brochuresc. direct maild. use of public relations firms
Answer:
a. personal contact
Explanation:
The most effective method for finding shopping center tenants is personal contact. Personal contact is the only way to actually get to know an individual and understand what they are looking for as well as if they will be a good fit for the specific shopping center unit. Other options only allow you to see a rough description of the individual which may be false and can ultimately waste time.
To develop the sales budget, companies must estimate both unit sales and the production cost per unit. true or false
Answer:
False
Explanation:
The sales budget is a budget that indicates the amount of goods or services that the company expects to sell in a specific period of time. In order to make the sales budget, you have estimate the amount of units you plan to sell and multiply this for the selling price per unit to get the total sells. According to this, the statement that says that to develop the sales budget, companies must estimate both unit sales and the production cost per unit is false because to develop the sales budget, companies must estimate unit sales and selling price per unit.
Russell Corporation sold a parcel of land valued at $477,500. Its basis in the land was $360,512. For the land, Russell received $117,750 in cash in year 0 and a note providing that Russell will receive $192,000 in year 1 and $167,750 in year 2 from the buyer (plus reasonable interest on the note). (Do not round intermediate calculations. Round your answers to 2 decimal places.)a. What is Russell realized gain on transaction?
b. what is Russel's recognized gain in year1, year2, year3.
Answer:
Can u help me plz
Explanation:
The following balance sheet for the Los Gatos Corporation was prepared by a recently hired accountant. In reviewing the statement you notice several errors. LOS GATOS CORPORATION Balance Sheet At December 31, 2018 Assets Cash $ 50,000 Accounts receivable 95,000 Inventories 60,000 Machinery (net) 125,000 Franchise (net) 35,000 Total assets $ 365,000 Liabilities and Shareholders’ Equity Accounts payable $ 60,000 Allowance for uncollectible accounts 10,000 Note payable 65,000 Bonds payable 115,000 Shareholders’ equity 115,000 Total liabilities and shareholders’ equity $ 365,000 Additional information: Cash includes a $25,000 restricted amount to be used for repayment of the bonds payable in 2022. The cost of the machinery is $200,000. Accounts receivable includes a $25,000 note receivable from a customer due in 2021. The note payable includes accrued interest of $10,000. Principal and interest are both due on February 1, 2019. The company began operations in 2013. Income less dividends since inception of the company totals $40,000. 55,000 shares of no par common stock were issued in 2013. 200,000 shares are authorized. Required:
Required:
Prepare a corrected, classified balance sheet. (Amounts to be deducted should be indicated by a minus sign.)
Answer:
LOS GATOS CORPORATION Balance Sheet At December 31, 2018
Assets:
Current Assets:
Cash $ 25,000
Bond Sinking Fund 25,000
Accounts receivable 70,000
Allowance for
uncollectible accounts -10,000 60,000
Inventories 60,000
Total Current Assets $170,000
Non-current Assets:
Machinery 200,000
less accumulated
depreciation -75,000 125,000
Franchise (net) 35,000
Notes Receivable 25,000
Total Non-current assets $185,000
Total assets $355,000
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable $ 60,000
Note payable 55,000
Interest on Notes Payable 10,000 $125,000
Bonds payable 115,000
Shareholders’ equity:
Authorized 200,000 share
Issued at no par 75,000
Retained Earnings 40,000 115,000
Total liabilities & shareholders’ equity $355,000
Explanation:
a) Adjustments:
1. Cash Balance:
As per question $50,000
Bonds Sinking Fund 25,000
Balance $25,000
2. Accounts Receivable:
As per question $95,000
Notes Receivable 25,000
Balance $70,000
3. Notes Payable:
As per question $65,000
Accrued interest 10,000
Balance $55,000
4. Retained Earnings = $40,000
5. The corrected and reclassified balance sheet shows the total current assets, liabilities, and the Retained Earnings.
A) Accounts receivable, net of allowance for uncollectible accounts of ($137,000 minus $39,000) $98,000 then deduct the accrued interest from it the balance amount is ($98,000 minus $24,000) $74,000.B) Common stock (Total shareholder's equity minus Retained earnings) that is $89,000
LOS GATOS CORPORATION Balance sheet at December 31,2016
Assets
Current Assets
Cash $39,000
Accounts receivable, net of allowance for uncollectible accounts of $24,000 $74,000
Inventories $74,000
Total Current Assets Investments $187,000
Bond sinking fund $39,000
Notes receivables $39,000
Total Investments $78,000
Property, plant and equipment: Machinery $228,000
Less: Accumulated depreciation $89,000
Net Property, plant and equipment $139,000
Intangible assets
Franchise $49,000
Total Asset $453,000
Liabilities and shareholder's equity
Current Liabilities
Accounts Payable $88,000
Interest payable $24,000
Notes payable $69,000
Total Current liabilities $181,000
Long term liabilities
Bonds payable $129,000
Shareholder's equity
Common stock, no par value: $200,000 shares authorized, shares issued and outstanding $89,000
Retained Earnings $54,000
Total shareholder's equity $143,000
Total liabilities and shareholder's equity $453,000
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The managers in Julio's company sponsor monthly brainstorming sessions and reward employees with gift cards and recognition when an out-of-the box idea leads to organizational improvements. Julio's company is an example of a(n) _______ organization.
Answer:
Learning.
Explanation:
In this scenario, the managers in Julio's company sponsor monthly brainstorming sessions and reward employees with gift cards and recognition when an out-of-the box idea leads to organizational improvements.
Hence, Julio's company is an example of a learning organization.
A learning organization is one which is typically characterized by creating an enabling environment for growth, training, and development of its employees. This opportunity and incentives help employees to engage in critical and creative thinking, research, and development. Consequently, employees would become more confident, brilliant, intelligent, knowledgeable and professionals in their assigned positions or roles, thus helping the organization to achieve its aim, goals and objectives.
In a nutshell, this ultimately implies that it's very important and necessary that organizations sponsor brainstorming sessions and reward employees awesomely, when an out-of-the box idea leads to organizational improvements.
When a bill is paid using the Pay Bills window, QuickBooks records a journal entry that:________. A) Debits Accounts Receivable,Credits Checking account B) Debits Expense account, Credits Accounts Payable C) Credits Checking account, Debits Accounts Payable D) Debits Checking account, Credits Undeposited Funds
Answer:
C)
Explanation:
When a bill is paid using the Pay Bills window, QuickBooks records a journal entry that Credits Checking account, Debits Accounts Payable. Meaning that it records a withdrawal (Credit) from your own checking account that was used to pay the bill, while simultaneously records a deposit (Debit) on the account that was just paid through the bill.
Two solutions are investigated for a safety program Soution 1 First cost ---25,000 annual maintenance cost 4,000 Life -- 2years Solution 2 First cost ---88,000 annual maint 1400 Life 6 years Neither project has a salvage value Compare the two solutions using present value using 15% interest- what is present cost of solution 2
Answer:
Present value for solution 2 = $93,298.28
Solution 1 has a lower cost compared to solution 2. Solution 1 would be more desirable based on the lower cost
Explanation:
Present value is the sum of discounted cashflows
Solution 1
Cash flow in year 0 = 25,000
Cash flow in year 1 and 2 = 4,000
I = 15%
Present value = $31,502.84
Solution 2
Cash flow in year 0 = 88,000
Cash flow in year 1 and 6 = 1,400
I = 15%
Present value = $93,298.28
Solution 1 has a lower cost compared to solution 2. Solution 1 would be more desirable based on the lower cost
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
Government officials have hired your consulting firm to encourage more people to use the theater . In the initial meeting, you discussed several options for increasing demand. Three suggestions are listed below. Based on your knowledge of the law of demand, what is your recommendation for each suggestion?
Suggestion 1: Reduce the price of public transportation
Choose one:
a. Not recommend
b. Recommend
Suggestion 2: Increase the prices of private transportation by increasing the price of parking and gasoline
Choose one:
a. Not recommend
b. Recommend
Suggestion 3: Offer monthly and yearly passes that reduce the price per ride
Choose one:
a. Not recommend
b. Recommend
Answer:
Suggestion 1: Not Recommended
Suggestion 2: Recommended
Suggestion 3: Not Recommended
Explanation:
The law of demand says that the increase in the price of the commodity will result in decrease in the utility derived from that product and as a result the consumption of the product falls.
So by keeping the law of demand in view, we can say that the:
Reduction in price of public transportation is not recommended because every transporter will start investing in public transport and we will have higher number of buses per person.The increase in the price of parking and gasoline is recommended as the increase in parking fees and gasoline cost will discourage people to buy private transportation.Offer of monthly and yearly passes to reduce the price per ride is not recommended as it encourages the cyclists to travel via bus. Hence it is not recommended.You own a portfolio of two stocks, A and B. Stock A is valued at $6,124 and has an expected return of 14.5 percent. Stock B has an expected return of 7.8 percent. What is the expected return (in percent) on the portfolio if the portfolio value is $10,375
Answer:
The expected return (in percent) on the portfolio is 11.8 percent.
Explanation:
The expected return on a portfolio refers to the addition of the products of weight in the portfolio and expected return of all the investment in the portfolio.
For this question, the expected return (in percent) on the portfolio can be calculated as follows:
Portfolio value = $10,375
Value of Stock A = $6,124
Value of stock B = Portfolio value - Value of stock A = $10,375 - $6,124 = $4,251
WA = Weight of stock A in the portfolio = Value of stock A / Portfolio value = $6,124 / $10,375 = 0.59, or 59%
WB = Weight of stock B in the portfolio = Value of stock B / Portfolio value = $4,251 / $10,375 = 0.41, or 41%
EA = Expected return of Stock A = 14.5%
EB = Expected return of Stock B = 7.8%
Therefore, we have:
Expected return on the portfolio = (WA * EA) + (WB * EB) = (59% * 14.5%) + (41% * 7.8%) = 11.8 percent
Therefore, the expected return (in percent) on the portfolio is 11.8 percent.
Aspin Corporation’s charter authorizes issuance of
2,000,000 shares of common stock. Currently, 1,400,000 shares are outstand-
ing, and 100,000 shares are being held as treasury stock. The firm wishes to
raise $48,000,000 for a plant expansion. Discussions with its investment bankers
indicate that the sale of new common stock will net the firm $60 per share.
Answer and Explanation:
The calculation of the sale of new common stock is shown below:-
a. Not issued = Authorized shares - Outstanding shares - Treasury stock
= 2,000,000 - 1,400,000 + 100,000
= 500,000
Now
Maximum shares = Not issued + Treasury stock
= 500,000 + 100,000
= 600,000
b. Since if we find out the number of shares that should be issued is
= $48,000,000 ÷ $60 per share
= 800,000
But the maximum shares is 600,000 so this shares would only be issued upto this limit only
Therefore the funds should not be raised
c. Now The firm could also develop extra 200,000 shares together it get amortized also.
Hence, it can sell 800,000 shares and the amount could rise to $48,000,000
Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process are referred to as
Answer:
Period costs
Explanation:
Period costs are Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process. These cost are not related directly to the production process. These costs cannot be capitalized on the company's balance sheet. They are expensed in the period in which they were incurred and are included in the financial statement during their assigned accounting period.
Contracts are a form of private law because the terms contained within a contract bind the relevant parties, not the public as a whole.
a) true
b) false
Answer:
The correct answer is the option A: True.
Explanation:
To begin with, the contracts inside the law are regulated by the Anglo-America common law that defines a contract as the agreement between two or more parties in which they establish the basis and principles of the agreement and the clauses that could cause to end the contract. Moreover, a contract is also part of the civil law and therefore that it does not implicate the public as a whole in any way due to the fact that in order to be a correct contract the parties must accept the bond between only them and nobody else.
Discuss the logic underlying the use of three-sigma limits on Shewhart control charts. How will the chart respond if narrower limits are chosen
Answer:
The Shewhart control charts are charts used to monitor processes and behaviours in businesses statistically to ensure they are under control. They have been known to produce superb results especially with the use of the 3-sigma limits. The use of narrower limits provides practicality in testing more scenarios, the investigation of more causes and detection of more false causes.
Explanation:
The use of the 3 sigma limits in the Shewhart control charts using narrow limits provides for better control of business enterprises by ensuring that more investigations and detection of false causes are conducted. Thes gives a much more specific range of results in practice compared to the wide range approach.
The use of three-sigma limits on Shewhart control charts is simply used as an economic guide to minimize economic loss.
It should be noted that three-sigma points are used as a rational and economic guide to minimum economic loss.
It typically sets a range for the process parameter at a control limit of 0.27%. The three-sigma control limits are used for checking data from a process. These are vital to monitor behaviors and processes in business.
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Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year:Work in Process, January 1 $53,000Work in Process, December 31 38,500Direct materials used 14,000Total Factory overhead 7,000Direct labor used 28,000a- $49,000.b- $95,000.c- $102,000.d- $63,500.e- $14,500.
Answer:
The correct answer is D.
Explanation:
Giving the following information:
Work in Process, January 1 $53,000
Work in Process, December 31 38,500
Direct materials used 14,000
Total Factory overhead 7,000
Direct labor used 28,000
To calculate the total manufacturing costs, we need to use the following formula:
cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP
cost of goods manufactured= 53,000 + 14,000 + 28,000 + 7,000 - 38,500
cost of goods manufactured= $63,500
Your company, Beta Corporation, is considering a new project which you must analyze. Based on the following data, what is the project's Year 1 operating cash flow?
Sales $22,000
Depreciation $8,000
Other operating costs $12,000
Tax rate 35%
Answer:
Net operating cash flow= $9,300
Explanation:
Giving the following information:
Sales $22,000
Depreciation $8,000
Other operating costs $12,000
Tax rate 35%
We need to determine the net operating cash flow:
Sales= 22,000
Other operating costs= (12,000)
Depreciation= (8,000)
EBIT= 2,000
Tax= (2,000*0.35)= (700)
Depreciation= 8,000
Net operating cash flow= 9,300
In 2019, Winn, Inc. issued $1 par common stock for $35 per share. No other common stock transactions occurred until July 31, 2021, when Winn acquired some of the issued shares for $30 per share and retired them. Which of the following statements correctly states an effect of this acquisition and retirement?
a. 2021 net income is decreased.
b. Additional paid-in capital is decreased.
c. 2021 net income is increased.
d. Retained earnings is increased.
Answer:
b. Additional paid-in capital is decreased
Explanation:
The entry to record acquisition and retirement is:
Debit Credit
Common stock $1
Paid-in capital—excess of par $34
Paid-in capital—share repurchase $5
Cash $30
Conclusion: Additional paid-in capital is decreased.
Corporation has the following data as of December 31, 2018:
Total Current Liabilities $38,420 Total Stockholders' Equity$ ?
Total Current Assets 62,100 Other Assets 36,800
Long-term Liabilities 179,530 Property, Plant, and Equipment, Net 264,350
Compute the debt to equity ratio at December 31, 2018. (Round your answer to two decimal places, X XX)
Total liabilities Total stockholders' equity Debt to equity ratio
Answer: 1.5
Explanation:
The debt to equity ratio will be calculated as total liabilities divided by the total equities.
The total liabilities is the sum of the total current liabilities and the long term liabilities. This will be:
= 38420 + 179,530
= $217950
Total equities will be the difference between the total assets and total liabilities. This will be:
Total asset = 264,350 + 36,800 + 62,100
= $363,250
Total equity = total asset - total liability
= $363,250 - $217,950
= $145,300
Debt to equity ratio = total liabilities/total equity
= 217950/145,300
= 1.5
Jack Pickle decided to start a small business as a corporation. His initial investment was $4,000 cash in exchange for common stock. Demonstrate how to record this transaction in the accounting equation?
Answer:
Increase cash by $4,000 and Increase common stock by $4,000
Explanation:
Demonstration of how to record Jack Pickle
transaction in the accounting equation
Since we were told that Jack Pickle decided to start a small business in form of a corporation in which his initial investment was the sum of $4,000 cash and the cash was in exchange for common stock, therefore using accounting equation this means when we want to record Jack Pickle transactions we have to increase the cash by the sum of $4,000 and the increase common stock by the sum of $4,000.
Increase cash by $4,000 and Increase common stock by $4,000
Firm Y has issued 500 million shares of stock at $1 par value and $200 millino in additional paid in capital. Retained earnings are $5.6 billion. What is the return on equity if net income if net income is $1.1 billion?
Answer:
Return on equity = 17.46%
Explanation:
DATA:
Issued share capital = $500m
Additional Paid-in capital = $200 million
Retained Earnings = $5.6 billion
Net Income = $1.1 billion
Return on Equity = ?
Solution
Return on equity can be calculated by dividing net income in total shareholder's equity
NOTE: ALL THE WORKINGS ARE IN 1000's
Return on equity = Net Income / Shareholder's Equity
Return on equity = 1,100,000 / (500,000 + 200,000 +5,600,000)
Return on equity = $1,100,000/6,300,000
Return on equity = 17.46%
The Supplies Expense account was debited $1,240 by the Sanford Company for office supplies purchased during the first year of operations. At year-end, the office supplies on hand were counted and the cost of the on-hand items was $880. The appropriate adjusting entry would:
Answer:
The Decrease in expenses $360
Explanation:
Since the supplies expense is debited by $1,240 for office supplies purchased
and the office supplies on hand is $880
So, the remaining office supplies left is
= Supplies expenses debited for Office supplies purchased - office supplies on hand
= $1,240 - $880
= $360
This $360 represent that there is a decrease in expenses
Which of the following is a good way to back up your computer?
Handwritten notes
jpegs
External hard drives
Duplicate files
Answer:
External hard drives
Explanation:
The External hard drive is mainly used for heavy data storage. In most of the big companies, the hard drive is used to save the data for the long term and can easily pass to one person to another and it can be connected through USB
Therefore external hard drives are having a high capacity to store the data. So, the correct answer is External hard drives.
What is the pro-forma as adjusted cash and cash equivalents amount on Twitter’s balance sheet as mentioned in the amended S-1 filed November 4, 2013
Answer:
The pro-forma as adjusted cash and cash equivalents amount on Twitter's balance sheet as mentioned in the amended S-1 filed November 4, 2013 is:
$1,777,009,000
Reference was made to sec.gov/Archives/edgar/data.htm.
Explanation:
Cash and cash equivalents are company's current assets that are cash or can be converted into cash immediately. They are the most liquid of current assets.
We are all familiar with cash. Cash equivalents are short-term investments and commitments which a company can enter into using "temporarily idle cash" and they can easily be converted into cash as needed. Included in cash equivalents are bank accounts and marketable debt securities with less than 90 days' maturity period. The expression means that they are equivalent to cash but are not cash because of their ease of convertibility.
On May 1, Southern Oil Corporation purchased 2,000 shares of its $10 par value common stock at a cash price of $13/share. On July 15, 900 shares of the treasury stock were sold for cash at $17/share. Journalize the two transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.)
Answer:
1.
May 1,
DR Treasury Stock $ 26,000
CR Cash $26,000
(To record purchase of Treasury Stock)
Working - 2,000 * $13 per share
= $26,000
2.
July 15,
DR Cash $ $15,300
CR Treasury Stock $11,700
CR Additional Paid-in Capital $3,600
(To record sale of Treasury Stock)
Working and Notes
Cash = 900 * $17 per share = $15,300
Treasury Stock = 900 * purchase price of $13 per share = $11,700
When a stock is sold for more than it was bought or issued for, record this in the Additional Paid-in Capital account.
= Cash - Treasury
= 15,300 - 11,700
= $3,600
On January 15 of the current year, Henry sold stock with a basis of $7,000 to his grandson Isaac for $4,000, its fair market value on that date. On December 30 of the current year, Isaac sold the same stock for $8,000 to a friend in a bona fide, arms-length transaction. As a result of these transactions, A. Isaac has a recognized gain of $4,000. B. Isaac has a recognized gain of $1,000. C. Henry has a recognized loss of $3,000. D. Neither Henry nor Isaac has a recognized gain or loss.
Answer:
B. Isaac has a recognized gain of $1,000
Explanation:
Issac's basis in computing gain is $7,000
Therefore, Gain = Selling Price - Basis Price
Gain = $8000 - $7,000
= $1,000
Issac has a recognized gain of $1000
Westchester Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A has an IRR of 11%, while Project B's IRR is 14%. When the WACC is 8%, the projects have the same NPV. Given this information, which of the following statements is CORRECT?a. If the WACC is 9%, Project A's NPV will be higher than Project B's. b. If the WACC is greater than 14%, Project A's IRR will exceed Project B's. c. If the WACC is 13%, Project A's NPV will be higher than Project B's. d. If the WACC is 9%, Project B's NPV will be higher than Project A's. e. If the WACC is 6%, Project B's NPV will be higher than Project A's.
Answer:
d. If the WACC is 9%, Project B's NPV will be higher than Project A's.
Explanation:
The internal rate of return is the return in which the NPV is zero i.e cash inflows equal to the initial investment
While the WACC refers to the cost of capital by considering the capital structure i.e cost of equity, cost of preferred stock and cost of debt by taking their weightage
Now if the WACC is 9% so project B NPV would be higher as compared to project A as we can see that project B IRR is greater than the project A IRR
Therefore option d is correct
g explain why a consumer will never choose to consume a combination of goods where their indifference curve is upward sloping.
Answer:
The correct answer is: Because that action will violate the basic principles of the preferences of the consumers.
Explanation:
To begin with, the microeconomic theory, the consumers have preferences and to that preferences there are simple conditions and principles that have to be respected. Those conditions establish that a consumer have preferences that are "complete", "transitive" and that they prefer much more of a good product that less of that product. If a consumer will choose to consume a combination of goods where their indifference curve is upward sloping then the rules will be violate and that will not respect the logic of the economy's theory because it is stated that the indifference curves are convex.