Answer:
Increase in assets of $8,000 and an increase in liabilities $8,000
Explanation:
The effect of the transaction is shown below with the help of the accounting equation
Liabilities + Owner equity = Assets
$8,000 + 0 = $8,000
($10,000 - $2,000)
Therefore from the above calculation, we can see that there is an increase in assets also there will be an increase in liabilities but no effect on stockholder equity
Dudley is a manager at the SuperCuts franchise. He has had to fire two employees because they were treating walk-in customers with disdain and thus turning away business. Once those employees were gone, he trained new employees on how to greet customers. Business has been improving and he has realized how important personnel are for a retail business. What role do the personnel play at his SuperCuts franchise?
Answer:
they are the interface between the brand and the customer
Explanation:
Based on the information provided within the question it can be said that the personnel in SuperCuts are the interface between the brand and the customer. The personnel are the ones that interact on a daily basis with the shoppers and provide all the information that they need regarding the SuperCut's brand in order to generate sales.
Wendy wants to start a business. She knows many unaccredited investors who she knows will help her jumpstart her business. What constraints on investments for new businesses apply here?
Available Options are:
A. Investors' allowable investment depends on the accredited or non-accredited status.
B. Investors may invest a combined $50 million within a 12-month period.
C. Investors may invest no more than $1 million combined for the first year of the business.
Answer:
Option C. Investors may invest no more than $1 million combined for the first year of the business.
Explanation:
The non-accredited investors do not invest more than $1 million for first year. Furthermore, for Investor it also imposes investment in current business conditions which says that Investor can invest in its business with greater of:
1. $2000
2. Or the lesser of (If the net worth of Wendy is less than $100,000)
5% of its total income for the year Net worthThere is also an option which is available if the net worth of Investor exceeds above $100,000 then he can invest up to lesser of 10% of his income or net worth, otherwise he will have to follow the above conditions.
Here, it also has an upper limit, which means that the investor can not invest more than $100,000 in the subsequent year, whatever the level of net worth or income he had for the year.
This means the non-accredited investor can not invest more than $1 million.
You would like to have $50,000 saved at the end of Year 5. At the end of Year 2, you can deposit $7,500 for this purpose. If you earn 4.5 percent, how much must you deposit today to reach your goal assuming no other deposits are made
Answer:
The amount that should be deposited today is $33254.58
Explanation:
The deposit should be such that the future value of the deposit made today and at the end of year 2 should be equal to $50000 after 5 years. Let the deposit made today be x. The equation for the future value will be,
50000 = x * (1+0.045)^5 + 7500 * (1+0.045)^3
50000 = x * (1.045)^5 + 8558.745938
50000 - 8558.745938 = x * (1.045)^5
41441.25406 / (1.045)^5 = x
x = $33254.57769 rounded off to $33254.58
AB Corporation and YZ Corporation formed a partnership to construct a shopping mall. AB contributed $527,000 cash, and YZ contributed land ($527,000 FMV and $457,000 basis) in exchange for a 50 percent interest in ABYZ Partnership. Immediately after its formation, ABYZ borrowed $263,500 from a local bank. The debt is recourse (unsecured by any specific partnership asset). Compute each partner's initial basis in its partnership interest, assuming that:
a. AB and YX are both general partners.
b. AB is a general partner, and YZ is a limited partner.
Answer:
a. AB and YX are both general partners.
AB's basis in the partnership's interests = $527,000 + ($263,500/2) = $658,750
YZ's basis in the partnership's interests = $457,000 + ($263,500/2) = $588,750
Each partner share 50% interest in the recourse debt.
b. AB is a general partner, and YZ is a limited partner.
AB's basis in the partnership's interests = $527,000 + $263,500 = $790,500
YZ's basis in the partnership's interests = $457,000
Only AB has a share in the recourse debt, since YZ is a limited partner it has no recourse debt share.
Department 1 completed and transferred out 450 units and had ending work in process inventory of 60 units. The ending inventory is 20% complete for materials and 60% complete for labor and overhead. The equivalent units of production for labor and overhead is
Answer:
486
Explanation:
verified 10/29/2020
Dividends are expected to grow at 25% per year during the next three years, 15% over the following year and then 6% per year indefinitely. The required return on this stock is 9% and the stock currently sells for $79 per share. What is the projected dividend for the second year
Answer:
$1.56
Explanation:
Lets assume the dividend paid for year zero is $1. The growth for the first 3 years is 25% which is given in the question. Now we will find the value of the Projected dividend for year 2 using the compounding formula, as under:
The Projected dividend for year 1 = $1 * (1 + 25%)^ 2 years = $1.56
"The manufacturing operations of Bryant, Inc. had the following balances for the month of January:
Inventories January 1 January 31
Raw materials $12,000 $13,000
Work in process 21,000 23,000
Finished goods 14,000 16,000
Bryant transferred $290,000 of completed goods out of work in process during January.
Compute the cost of goods sold.
a. $293,000
b. $270,000
c. $268,000
d. $272,000
Answer:
COGS= $288,000
Explanation:
Giving the following information:
Inventories January 1 January 31
Finished goods 14,000 16,000
Bryant transferred $290,000 of completed goods out of work in the process during January.
To calculate the cost of goods sold, we need to use the following formula:
COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory
COGS= 14,000 + 290,000 - 16,000
COGS= 288,000
Splish Brothers Inc. issues $4.8 million, 5-year, 7% bonds at 102, with interest payable on January 1. The straight-line method is used to amortize bond premium. Prepare the journal entry to record interest expense and bond premium amortization on December 31, 2017, assuming no previous accrual of interest.
Answer and Explanation:
The Journal entries are shown below:-
Interest expense Dr, $316,800
Premium on bonds payable Dr, $19,200 ($96,000 ÷ 5)
To Interest payable $336,000 ($4,800,000 × 7%)
(Being interest expense and bond premium amortization is recorded)
Here we debited the interest expenses and premium on bonds as it increased the expenses and we credited the interest payable as it also increased the liabilities
Suppose a business takes out a $7,000, five-year loan at 6 percent that will be paid annually with a single, fixed payment each period. How much will be the annual payment?
Answer: $1,662
Explanation:
The question is asking for the annual payment that will result in a present value of $7,000 given 6% and 5 years. This payment is constant so is an annuity.
7,000 = Payment * Present value Interest factor of an Annuity, 6%, 5 periods)
7,000 = Payment * 4.212
Payment = 7,000/4.212
= $1,661.92
= $1,662
The cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $538,900. The conversion cost for the period in the Bottling Department is $592,000. The total equivalent units for direct materials and conversion are 31,700 and 7,400, respectively. Determine the direct materials and conversion cost per equivalent unit.
Answer: 17 per unit; 80 per unit
Explanation:
From the question, we are informed that the cost of direct materials transferred into the Bottling Department of Mountain Springs Water Company is $538,900 and that the conversion cost for the period in the Bottling Department is $592,000 while the total equivalent units for direct materials and conversion are 31,700 and 7,400, respectively.
The direct materials cost per equivalent unit will be the cost of direct materials that is transferred into the Bottling Department of Mountain Springs Water Company which is $538,900 divided by the total equivalent units for direct materials which is 31700. This will be:
= $538,900/31700
= 17 per unit
The conversion cost per equivalent unit will be the conversion cost for the period in the Bottling Department which is $592,000 divided by the total equivalent units for conversion which is 7,400. This will be:
= $59200/7400
= 80 per unit
Ms. Johnson invested $10,000 in a 10-year zero coupon bond and $20,000 in a 3-year semiannual coupon bond that has a duration of 2.5 years. Her portfolio is immunized from interest rate risk if ______.
Answer:
Her investment horizon is 5 years
Explanation:
If investment = $10,000
10-year zero coupon bond
$20,000 in a 3-year semiannual duration = 2.5 years.
Duration = (1/3 )*10 + (2/3)*2.5
= 5 years
The entrepreneur's integrity is not relevant to bankers when determining the creditworthiness of a business loan.
A. True
B. False
Answer:
A.True
Explanation:
a person who sets up a business or businesses, taking on financial risks in the hope of profit.
In calculating the creditworthiness of an entrepreneur, integrity is true.
Why is an entrepreneur's integrity not important?Financial establishments try to mitigate the hazard of lending to debtors via means of performing a credit score evaluation on people and companies using a brand new credit score account or loan.
They are called the 5 Cs of credit score because they consist of capacity, capital, conditions, character, and collateral.
So, from the above declaration, it's clear that the option B is true.
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Coates Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $249,000, variable manufacturing overhead of $3.80 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job X784 which was recently completed: Number of units in the job 50 Total machine-hours 250 Direct materials $ 470 Direct labor cost $5,500 If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to:
Answer:
Selling price per unit= $233.87
Explanation:
Giving the following information:
Overhead:
Estimated overhead= $249,000
Variable manufacturing overhead= $3.80 per machine-hou
Estimated machine-hours= 30,000 machine-hours.
Job X784:
Number of units in the job 50
Total machine-hours 250
Direct materials $ 470
Direct labor cost $5,500
Selling price= 30% mark up
First, we need to calculate the predetermined overhead rate:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Predetermined manufacturing overhead rate= (249,000/30,000) + 3.8
Predetermined manufacturing overhead rate= $12.1 per machine hour
Now, we can determine the total cost of Job X784:
Total cost= 470 + 5,500 + (12.1*250)
Total cost= $8,995
Finally, the selling price per unit:
Unitary cost= 8,995/50= $179.9
Selling price per unit= 179.9*1.30= $233.87
If some of the products developed by I'mASoftwareCo. must face market competition that can very quickly produce either an identical product or a close substitute for it, then
a) it may decide against R&D projects of this sort.
b) it will have to figure out innovative ways to prevent adaptation and copying of its products.
c) the other firms will all save on their R&D costs.
d) it must charge more for its products to quickly compensate for the research and development costs.
Answer:
A.It may decide against R & D projects of this sort
Explanation:
Where there is market competition, such can present an avenue for a firm to discover new products/technology. Also, a firm could generate more profit because they are able to produce goods at a cheaper rate or produce products with certain features that suits customers needs. When a firm is innovative, it will have an edge over it's competitors in the mean time hence must have made enough profits before competitors catches up.
However, in a case where competition discourages technology as in the above case i.e a new firm copying the company's idea, the company may decide against R&D projects of this sort because if the research and development effort fails, the company may incur loss which could drive it out of business. Moreover, it means that the R&D on such product has not been successful since an identical product or a close substitute product can quickly be produced by it's competitors hence must be decided against to avoid them making losses.
The payroll register for Gamble Company for the week ended April 29 indicated the following:
Salaries $1,560,000
Social security tax withheld 93,600
Medicare tax withheld 23,400
Federal income tax withheld 312,000
In addition, state and federal unemployment taxes were calculated at the rate of 5.4% and 0.6%, respectively, on $260,000 of salaries.
Required:
a. Journalize the entry to record the payroll for the week of April 29.
b. Journalize the entry to record the payroll tax expense incurred for the week of April 29.
Answer and Explanation:
The journal entries are shown below:
1. Salaries expense Dr $1,560,000
To Social security tax payable $93,600
To Medicare tax payable $23,400
To Federal income tax withheld payable $312,000
To Salaries payable $1,131,000
(Being the payroll is recorded)
For recording this we debited the salary expense as it increased the expenses and credited all payable as it also increased the liabilities
2. Payroll tax expense Dr $132,600
To Social security tax payable $93,600
To Medicare tax payable $23,400
To State unemployment tax payable ($260,000 × 5.4%) $14,040
To Federal unemployment tax payable ($260,000 × 0.6%) $1,560
(being the payroll tax expense is recorded)
For recording this we debited the payroll expense as it increased the expenses and credited all payable as it also increased the liabilities
Brandon is a successful professional. He is a divorced father of a 10 year old. He is confident due to his award-winning work on the college debate team. He is conscious of fashion and is meticulous about his clothes. He subscribes to numerous trade and specialty magazines. He loves to tell others about the new products he buys.
A. EA
B. EM
C. L
D. LM
Answer:
A). EA (Early Adopters)
Explanation:
There are basically five categories of adopters namely (in no particular order):
Early adopters (EA);
Late majority(LM);
Early majority (EM);
Innovators (I);
Laggards (L).
The early adopters can be said to be trend setters. Their opinions are taken by others as they are quite young and have enough social contacts. They tend to adopt to new technologies easily, but not as apt as the innovators. The early adopters tend to show off their choice of fashion and trends and even suggest to others to buy similar products.
All the characteristics of Brandon listed in this case falls in the early adopters perfectly. Therefore we can say that brandon is an early adopter(EA).
Option A is correct.
You sold short 200 shares of common stock at $60 per share. The initial margin is 60%. Your initial investment was
Answer:
The answer is $4,800
Explanation:
200 shares was sold short at $60 per share with initial margin of 60 percent.
200 shares x $60 per share x (1 - 0.6)
=$12,009 x 0.4
$4,800
The initial investment is therefore, $4,800(four thousand and eight hundred dollars)
A special tax was levied by Downtown City to retire and pay interest on general obligation bonds that were issued to finance the construction of a new city hall. Where are the receipts from the tax recorded?
a. Capital Projects Fund
b. Special Revenue Fund
c. Debt Service Fund
d. General Fund
e. None of the above
Answer:
C. Debt Service Fund.
Explanation:
Dept service funds can be described as monies or reserves which are been used to pay for capitals, interest and certain dept that have accrued by the company and it can cover for any other form of dept owed by the company.
It's existence is put in place to reduce the risk of a debt security for future investors. This can be paid out monthly mid-monthly, quarterly or possibly yearly.
This why the tax on general obligation bonds that has been put upon Downtown city to finance the hall has it receipts in place at the dept service fund office.
One thing that moving averages and exponential smoothing have in common is:________
a) they can be used for long range forecasts
b) they are all a form of averages
c) they are always more accurate than time series regression forecasts
d) they result in higher MAPE values
Answer: B). They are all forms of averages
Explanation:
Below is budgeted production and sales information for Flushing Company for the month of December. Product XXX Product ZZZ Estimated beginning inventory 31,000 units 17,100 units Desired ending inventory 36,400 units 14,300 units Region I, anticipated sales 348,000 units 266,000 units Region II, anticipated sales 189,000 units 140,000 units The unit selling price for product XXX is $6 and for product ZZZ is $15. Budgeted production for product ZZZ during the month is a.604,400 units b.403,200 units c.406,000 units d.420,300 units
Answer:
Production= 403,200 units
Explanation:
Giving the following information:
Product ZZZ
Estimated beginning inventory= 17,100 units
Desired ending inventory 14,300 units
Sales:
Region I= 266,000 units
Region II= 140,000 units
Total= 406,000
To calculate the production required for the period, we need to use the following formula:
Production= sales + desired ending inventory - beginning inventory
Production= 406,000 + 14,300 - 17,100
Production= 403,200 units
Agler Corporation currently manufactures a sub assembly for its main product. The costs per unit are as follows:
Direct materials 1
Direct labor 10
Variable overhead 5
Fixed overhead 8
Total $ 24
Funkhouser Company has contacted Agler with an offer to sell it 4,000 of the sub assemblies for $17 each. If Agler buys the sub assemblies, $2 of the fixed overhead per unit will be allocated to other products.
Should Agler make or buy the sub assemblies?
Answer:
they should buy the sub assemblies
Explanation:
The costs per unit are as follows:
Direct materials $1 Direct labor $10 Variable overhead $5 Fixed overhead $8 Total $24offer from an outside vendor = $17 per unit
non-avoidable fixed costs = $8 - $2 = $6
alternative 1 alternative 2 differential
keep producing purchase amount
purchase cost $0 $17 $17
avoidable costs $18 $0 ($18)
total $18 $17 ($1)
if the company decides to purchase the parts from an outside vendor it will save $1 per unit.
In October of the current year, received a $15,520 payment from a client for 32 months of security services she will provide starting on September 1 of this year. This amounts to $485 per month. Janine is a calendar-year taxpayer.
a. When must Janine recognize the income from the $17,360 advance payment for services if she uses the cash method of accounting?
1. Year 1
2. Year 2
3. Year 0
4. Year 1 and year 2
5. Year 0 and year 1
b. When must Janine recognize the income from the $17,360 advance payment for services if she uses the accrual method of accounting?
1. Year 0 and Year 1
2. Year 0
3. Year 1
4. Year 1 and Year 2
5. Year 2
c. Suppose that instead of services, Janine received the payment for a security system (inventory) that she will deliver and install in year 2. When would Janine recognize the income from the advance payment for inventory sale if she uses the accrual method of accounting and she uses the deferral method for reporting income from advance payments? For financial accounting purposes, she reports the income when the inventory is delivered.
1. Year 2
2. Year 1
3. Year 0
4. Year 0 and year 1
5. Year 1 and year 2
d. Suppose that instead of services, Janine received the payment for the delivery of inventory to be delivered next year. When would Janine recognize the income from the advance payment for sale of goods if she uses the accrual method of accounting and she uses the full-inclusion method for advance payments?
1. Year 1
2. Year 1 and year 2
3. Year 2
4. Year 0 and year 1
5. Year 0
Answer:
a. When must Janine recognize the income from the $17,360 advance payment for services if she uses the cash method of accounting?
3. Year 0Cash method of accounting recognizes revenues and expenses when they are received or paid for.
b. When must Janine recognize the income from the $17,360 advance payment for services if she uses the accrual method of accounting?
1. Year 0 and Year 1
c. Suppose that instead of services, Janine received the payment for a security system (inventory) that she will deliver and install in year 2. When would Janine recognize the income from the advance payment for inventory sale if she uses the accrual method of accounting and she uses the deferral method for reporting income from advance payments? For financial accounting purposes, she reports the income when the inventory is delivered.
1. Year 2She will recognize revenue only after the merchandise is delivered.
d. Suppose that instead of services, Janine received the payment for the delivery of inventory to be delivered next year. When would Janine recognize the income from the advance payment for sale of goods if she uses the accrual method of accounting and she uses the full-inclusion method for advance payments?
5. Year 0Under this system, advanced payments are considered revenue on the year that they were received.
Ariel, a federal government employee, works in acquisition and procurement. Federal policies require that in contracting with suppliers, at least three bids must be received, and the lowest bid that meets specifications will be accepted. In this case, Ariel is dealing with a(n)
Answer:
Programmed decision
Explanation:
The programmed decision is the decision which are taken on a daily basis or we can day to day basis or routine basis. It is likely for solving the structured problems
In the given case, since minimum three bids are received and the bid who has less value meets the specification that results in an acceptance
Therefore this case is of Programmed decision
Express cost of goods sold as a common-size percentage using the following data. Sales - $45,000; cost of goods sold - $29,340; gross profit from sales - $15,660; operating expenses - $10,800; net income - $4,860.
a. 100%
b. 31%
c. 12%
d. 10.8%
Answer:
Cost of goods sold as a common size percentage= 65.2 %
Explanation:
Cost of goods sold as common size percentage implies the cost of goods sold in absolute is expressed as proportion of the absolute value of Revenue expressed as percentage.
Using the data above = cost of goods sold/Revenue × 100
= 29,340/45,000× 100
=65.2 %
Cost of goods sold as a common size percentage=65.2 %
A machine with a cost of $164,000, accumulated depreciation of $102,000, and current year depreciation expense of $25,500 is sold for $53,600 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
Answer:
$53,600
Explanation:
The computation of the cash flow from investing activities is shown below:
Cash flow from investing activities
Sale value of machinery $53,600
Net cash flow from investing activities $53,600
The current year depreciation expense is to be reported under operating activities and as we know that the investing activities record those activities which are held for purchased and sale of long term assets so the sale value fo machinery is only reported
what is the producers surplus when barylia engages in trade and the government imposes a tariff of $1
Answer: $20
Explanation:
When the Government introduces a tariff, it will have the effect of reducing competition for the local producers because import prices will now be higher.
The Producer surplus before the tariff was G because they were forced to sell at the global price. With the imposition of the tariff, the price went to $4 or rather P2. This then increased Producer Surplus to include area F as well.
The total Producer Surplus is therefore, F + G.
This is a triangle so it will be solved for the area by the formula;
= [tex]\frac{1}{2} * base * height[/tex]
= [tex]\frac{1}{2}[/tex] * 20 * ( 4 -2)
= 10 * 2
= $20
73) A company releases a five-year bond with a face value of $1000 and coupons paid semiannually. If market interest rates imply a YTM of 8%, which of the following coupon rates will cause the bond to be issued at a premium? A) 7% B) 6% C) 8% D) 10%
Answer:
The answer is D. 10%
Explanation:
The coupon rate that must cause the bond to be issued at a premium must be greater than the Yield-to-maturity (YTM).
If it is issued at a coupon rate equals to the Yield-to-maturity (YTM), it is said to be issued at par.
And If it is issued at a coupon rate lower to the Yield-to-maturity (YTM), it is said to be at discounts
Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:
Fixed Cost Cost per
per Month Car Washed
Cleaning supplies $0.80
Electricity $1,200 $ 0.15
Maintenance $0.20
Wages and salaries $5,000 $0.30
Depreciation $6,000
Rent $8,000
Administrative
expenses $4,000 $0.10
For example, electricity costs are $1,200 per month plus $0.15 per car washed. The company expected to wash 9,000 cars in August and to collect an average of $4.90 per car washed.
The actual operating results for August appear below.
Lavage Rapide
Income Statement
For the Month Ended August 31
Actual cars washed 8,800
Revenue $43,080
Expenses:
Cleaning supplies 7,560
Electricity 2,670
Maintenance 2,260
Wages and salaries 8,500
Depreciation 6,000
Rent 8,000
Administrative expenses 4,950
Total expense 39,940
Net operating income $3,140
Required:
Compute the company's revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Answer and Explanation:
The computation of the company's revenue and spending variances for August is shown below:-
Lavage Rapide
Revenue and Spending Variances
For the Month Ended August
Particulars Actual Revenue and Spending Flexible Budget
Results Variances
Actual Cars
Washed 8,800
Revenue $43,080 $40 U $43,120
Less:
Expenses
Cleaning Supplies $7,560 $520 U $7,040
Electricity $2,670 $150 U $2,520
Maintenance $2,260 $500 U $1,760
Wages and
Salaries $8,500 $860 U $7,640
Depreciation $6,000 0 $6,000
Rent $8,000 0 $8,000
Administrative
Expenses $4,950 $70 U $4,880
Total Expense $39,940 $2,100 U $37,840
Net Operating
Income $3,140 $2,140 U $5,280
We simply deduct all expenses from the revenue generated so that the net operating income could arrive
The Lavage Rapide's Revenue and Spending Variances for August are computed as follows:
Income Statement for August
Actual Budget Flexible Budget Variance
Actual cars washed 8,800 8,800
Revenue $43,080 $43,120 $40 U
Expenses:
Cleaning supplies $7,560 $7,040 $520 U
Electricity 2,670 2,520 $150 U
Maintenance 2,260 1,760 $500 U
Wages and salaries 8,500 7,640 $860 U
Depreciation 6,000 6,000 $0 None
Rent 8,000 8,000 $0 None
Administrative expenses 4,950 4,880 $70 U
Total expense $39,940 $37,840 $2,100 U
Net operating income $3,140 $5,280 $2,140 U
Data and Calculations:
Budgeted cars to wash in August = 9,000
Flexible budget = 8,800
Average price per car wash = $4.90
Total budgeted flexible revenue = $43,120 (8,800 x $4.90)
Fixed Cost Cost per Flexible
per Month Car Washed Budget
Cleaning supplies $0.80 $7,040 ($0.80 x 8,800)
Electricity $1,200 $ 0.15 $2,520 ($1,200 + $0.15 x 8,800)
Maintenance $0.20 $1,760 ($0.20 x 8,800)
Wages and salaries $5,000 $0.30 $7,640 ($5,000 + $.30 x 8,800)
Depreciation $6,000 $6,000
Rent $8,000 $8,000
Administrative
expenses $4,000 $0.10 $4,880 ($4,000 + $0.10 x 8,800)
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The market value of which of the items would be considered double (or multiple) counting in the calculation of GDP? Indicate the following that they are included in GDP or not included in GDP.
a. a used skateboard you buy for your brother
b. the commission paid to the seller of a previously owned collectors skateboard
c. a new building for tony hawk industries
d. used copy of the tony hawk video game
e. previously owned collectors skateboard
f. ticket for the X games bought from a person on a street corner
g. new skateboard you buy for your niece
h. Wheels used to produce a skateboard that will be sold new
Answer:
Included in GDP :
b. the commission paid to the seller of a previously owned collectors skateboard
c. a new building for tony hawk industries
g. new skateboard you buy for your niece
Not Included in GDP :
a. a used skateboard you buy for your brother
d. used copy of the tony hawk video game
e. previously owned collectors skateboard
f. ticket for the X games bought from a person on a street corne
h. Wheels used to produce a skateboard that will be sold new
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Net export = exports – imports
When exports exceeds import there is a trade deficit and when import exceeds import, there is a trade surplus.
Items not included in the calculation off GDP includes:
1. services not rendered to oneself
2. Activities not reported to the government
3. illegal activities
4. sale or purchase of used products
5. sale or purchase of intermediate products
the following items aren't included in the calculation of GDP because they are used items and were included in the year they were produced. adding them to GDP would be regarded as double counting
a. a used skateboard you buy for your brother
d. used copy of the tony hawk video game
e. previously owned collectors skateboard
h. Wheels used to produce a skateboard that will be sold new aren't included in the calculation of GDP because it an intermediate product used in the production of skateboards.
ticket for the X games bought from a person on a street corner aren't included in the calculation of GDP because they have already been paid for.
Consider the following data for a closed economy:
Y = $11 Trillion
C = $8 Trillion
I = $2 Trillion
TR = $1 Trillion
T= $3 Trillion
Use these data to calculate the following:
a. Private saving
b. Public saving
c. Goverment purchases
d. The goverment budget deficit or budget surplus
Answer: The answer is given below
Explanation:
a. . Private saving
Private saving=Y+TR-C-T
= $11t + $1t - $8t - $3t
= $12 trillion - $11 trillion
= $1 trillion
b. Public saving
Public Saving= T-G-TR
Since G is not given, we can use:
I = public saving + private saving
$2t = public savings + $1t
Public saving= $2 trillion - $1 trillion
Public savings = $1 trillion
c. Goverment purchases
Since public savings = T - G - TR
$1t = $3t - G - $1t
G = $3t - $1t - $1t
G = $3 trillion - $2 trillion
G = $1 trillion
d. The goverment budget deficit or budget surplus.
There is a budget surplus of $1 trillion which has been calculated in the public savings.