The recording, classification, summarising, and interpreting of financial events and transactions to give management and other interested parties.
The information they need to make informed decisions is a key distinction between accounting and other business functions, such as marketing and management. The goal of marketing is to draw attention from the outside world to a business, its goods or services, and to generate sales as a result. Accounting, on the other hand, is concerned with monitoring, documenting, and creating financial statements based on a company's internal financial characteristics. Accounting documents a company's historical operations, whereas finance supports decisions about the firm's future.
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Dinnertime
A professor is planning an informal gathering for 100 or so of his closest friends. The project breaks down as follows:
Activity Time Predecessor
Call planner 12
Book caterer 10
Hire quartet 9 Call planner
Schedule cleaning crew 15 Call planner
Stock wine cellar 7 Book caterer
Hire valets 8 Schedule cleaning crew, Stock wine cellar
Schedule butler overtime 13 Hire quartet, Hire valets
1. Refer to Table I, Which of these is not a critical path activity?
1) schedule cleaning crew
2) hire quartet
3) hire valets
4) schedule butler
2. Refer to Table I, What is the slack time for the Stock wine cellar activity?
1) 14
2) 8
3) 10
4) 12
3. Refer to Table I, What is the fastest this project can be completed?
1) 38
2) 48
3) 34
4) 44
Answer:
1. 2) hire quartet
2. 3) 10
3. 1) 38
Explanation:
Hiring the quartet is not a critical path activity as dinner can be arranged if this activity is not carried out. There is need for hiring the valet service, scheduling of cleaning crew and schedule butler. All these activities are critical path activities. The slack time for stock wine cellar activity is 10.
TB MC Qu. 10-149 (Algo) ABC Corporation makes a product ... ABC Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 7.7 grams $ 2.30 per gram Direct labor 0.5 hours $ 23.00 per hour Variable overhead 0.5 hours $ 7.30 per hour The company produced 5,500 units in January using 39,610 grams of direct material and 2,410 direct labor-hours. During the month, the company purchased 44,700 grams of the direct material at $2.00 per gram. The actual direct labor rate was $22.30 per hour and the actual variable overhead rate was $7.10 per hour. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The variable overhead rate variance for January is:
Answer:
Direct labor rate variance= $482 favorable
Explanation:
Giving the following information:
Variable overhead 0.5 hours $ 7.30 per hour
Actual direct labor hours= 2,410
The actual variable overhead rate was $7.10 per hour.
To calculate the variable overhead rate variance, we need to use the following formula:
Variable manufacturing overhead rate variance= (standard rate - actual rate)* actual quantity
Variable manufacturing overhead rate variance= (7.3 - 7.1)*2,410
Variable manufacturing overhead rate variance= $482 favorable
how to use standard deviation, I don't really understand how to calculate and use the formula, someone can please give me an example with formula it would be great thank you so much. 
An office building is expected to create operating cash flows of $30,500 a year for three years, based on tenants' rental income. The purchase of the fixed assets for this building will cost $63,000. These assets will have no value at the end of the project. An additional $2,000 of net working capital will be required throughout the life of the project. Calculate the net present value of this project if the required rate of return is 14 percent
Answer:
The net present value of this project is $5,809.78.
Explanation:
Note: See the attached excel file for the calculation of net present value of this project.
In the attached excel file, the discounting factor is calculated as follows:
Discounting factor = 1 / (100% + required rate of return)^n
Where n is a particular year in focus.
From the attached excel file, we have:
Net present value = $5,809.78
Therefore, the net present value of this project is $5,809.78.
Journalize the entries to record the following:
a. Check No. 12-375 is issued to establish a petty cash fund of $500.
b. The amount of cash in the petty cash fund is now $40. Check No. 12-476 is issued to replenish the fund, based on the following summary of petty cash receipts: office supplies, $212; miscellaneous selling expense, $156; miscellaneous administrative expense, $61. (Because the amount of the check to replenish the fund plus the balance in the fund do not equal $500, record the discrepancy in the cash short and over account.)
Required:
1. Journalize the entry to establish the petty cash fund.
2. Journalize the entry to replenish the petty cash fund.
Answer:
a. Dr Petty cash $500
Cr Cash $500
b. Dr Office supplies $212
Dr Miscellaneous selling expense $156
Dr Miscellaneous administrative expense $61
Dr cash over and short $31
Cr Cash $460
Explanation:
a. Preparation of the journal entry to establish the petty cash fund.
Dr Petty cash $500
Cr Cash $500
(To establish the petty cash fund)
b. Preparation of the journal entry to replenish the petty cash fund.
Dr Office supplies $212
Dr Miscellaneous selling expense $156
Dr Miscellaneous administrative expense $61
Dr cash over and short $31
($460-$212-$156-$61)
Cr Cash ($500-$40) $460
(To replenish the petty cash fund)
A company's old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000. The company also paid $33,000 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at:
Answer:
$45,000
Explanation:
Based on the information given we are told that the new machine had an estimated 20-year life as well as an invoice price of the amount of $45,000 which means that in a situation were the transaction has commercial substance the new machine should be recorded at invoice price of the amount of $45,000.
Therefore the new machine should be recorded at:$45,000
Given the following information, calculate the going-in capitalization rate for the following apartment complex. In your calculations, assume no miscellaneous income and above-the-line treatment of capital expenditures.
Number of apartment units: 15
Monthly rent per unit: $3,000
Vacancy and collection loss: 10% of potential gross income
Operating expenses: 5% of effective gross income
Capital expenditures: 10% of effective gross income
Acquisition price: $3,420,000
a. 0.81%
b. 1.01%
c. 13.50%
d. 15.79%
e. 12.08%
Answer:
The correct option is b. 1.01%.
Explanation:
This can be calculated as follows:
Potential gross income = Number of apartment units * Monthly rent per unit = 15 * $3,000 = $45,000
Therefore, we have:
Details Amount ($)
Potential gross income (PGI) 45,000
Vacancy and collection loss (10% of PGI) (4,500)
Effective gross income (EGI) 40,500
Operating expenses: 5% of effective gross income (2,025)
Capital expenditures (10% of effective gross income) (4,050)
Net operating income 34,425
Acquisition price = 3,420,000
Going-in capitalization rate = Net operating income / Acquisition price = $34,425 / $3,420,000 = 0.0101, or 1.01%
Therefore, the correct option is b. 1.01%.
Abigail does not feel that the company is paying her enough money to live on, despite the fact that she works hard. The quality of this_____________ (lack of belongingness, motivator, lack of power, hygiene factor) will make her dissatisfied with her work, according to Frederick Herzberg.
Answer:
hygiene factor
Explanation:
Since in the question it is mentioned that Abigail was not feel that the company would not pay sufficient money accrding to her work so here the quality of the hygiene factor would dissatisfied with her work
As the attributes that are along with the job satisfaction is known as hygiene factor
So as per the given situation, the above represent the answer
Select the correct word(s) from the drop down menu to finish the following sentences:
Fish in the ocean can be caught by anyone, and it is difficult to prevent people from fishing, in this sense, fish in the oceans are_____. If I catch a fish, that means there is one less fish in the sea for someone else to catch. Therefore, fish are_____. Considering those two characteristics, fish in the ocean are____.
Question Completion:
Drop-down menu:
- excludable
- non-excludable
- rivalrous
- non-rivalrous
- common goods
- club goods
- public goods
- private goods
Answer:
Correct words to finish the sentences:
Fish in the ocean can be caught by anyone, and it is difficult to prevent people from fishing, in this sense, fish in the oceans are__non-excludable___.
If I catch a fish, that means there is one less fish in the sea for someone else to catch. Therefore, fish are__rivalrous___.
Considering those two characteristics, fish in the ocean are_common goods___.
Explanation:
The two key characteristics of a public good are: it is non-excludable and non-rivalrous. A common good is non-excludable but rivalrous. A private good is excludable and rivalrous. A club good is excludable and non-rivalrous.
Non-excludable refers to goods that are costly and impossible for a person to exclude other users from using the goods.
Non-rivalrous good refers to goods that a person can use without preventing others from using the goods.
Freda's Florist reported the following before-tax income statement items for the year ended December 31, 2021: Operating income $ 269,000 Income on discontinued operations 55,000 All income statement items are subject to a 25% income tax rate. In its 2021 income statement, Freda's separately stated income tax expense and total income tax expense would be:
Answer:
the separately stated income tax expense and total income tax expense is $67,250 and $81,000 respectively
Explanation:
The computation of the separated stated income tax expense and total income tax expense is shown below
Income tax expense is
= $269,000 × 25%
= $67,250
And, the Total income tax expense is
= ($269,000 + $55,000) × 25%
= $81,000
hence, the separately stated income tax expense and total income tax expense is $67,250 and $81,000 respectively
The outstanding checks total_________.
1. $158.53
2. $246.53
3. $48.00
4. $914.47
Answer:
1,367.53
Explanation:
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co
a. Issued 198,000 shares of $6-par-value common stock for $1,188,000 in cash.
b. Borrowed $550,000 from Oglesby National Bank and signed a 11% note due in three years.
c. Incurred and paid $380,000 in salaries for the year.
d. Purchased $650,000 of merchandise inventory on account during the year.
e. Sold inventory costing $580,000 for a total of $910,000, all on credit.
f. Paid rent of $220,000 on the sales facilities during the first 11 months of the year.
g. Purchased $190,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days.
h. Paid the entire $139,000 owed for store equipment and $600,000 of the amount due to suppliers for credit purchases previously recorded.
i. Incurred and paid utilities expense of $36,000 during the year.
j. Collected $845,000 in cash from customers during the year for credit sales previously recorded.
k. At year-end, accrued $60,500 of interest on the note due to Oglesby National Bank.
l. At year-end, accrued $20,000 of past-due December rent on the sales facilities.
Required:
Prepare an income statement (ignoring income taxes) for Kissick Co.'s first year of operations and a balance sheet as of the end of the year.
Answer:
Income Statement Sales 9,00,000 Cost of goods sold 5,80,000 Gross profit 3,20,000 Salaries expense 3,90,000 Rent expense 2,40,000 Utilities expense 38,000 Loss from operations -3,48,000 Interest expense -59,400 Net loss -4,07,400 KI
Explanation:
Purchased $190,000 of store equipment, paying $51,000 in cash and agreeing to Paid the entire $139,000 owed for store equipment and $600,000 of the amount due to suppliers for credit purchases previously recorded. pay the difference within 90 days. that make it a way to create sales.
According to the literature on organizational conflict, constructive conflict Question 1 options: tends to produce beneficial outcomes, particularly better decision making. is the main source of conflict in organizations. is the only conflict management style that has high assertiveness and low cooperativeness. is one of the most common outcomes of organizational conflict.
Answer:
tends to produce beneficial outcomes, particularly better decision making.
Explanation:
Constructive conflict occurs when there are problems that need to be solved by a team in the organization, and thus influence people to cooperate with creative and innovative ideas for solving the problem that can help to produce beneficial results, especially better decisions.
Constructive conflict helps the organization to be more productive by aggregating different ideas about the same problem and focusing on the solution to the resolution, which increases the sense of team integration, participation and understanding of different alternatives that will be improved so that the organization has the best decision making for such a problem.
Using Firm Guidance to Research a Revenue Question
•You are an accountant working for Hotel Co. Your supervisor has asked you to research what amount of revenue Hotel Co. should recognize for transactions booked by customers on Expedia.com.
•Expedia generally collects the full transaction price from the customer, then withholds a small fee (say, $10) from each transaction and remits the balance to Hotel Co.
•Should Hotel Co. record the gross transaction fee or only the net amount it receives from Expedia.com? Use nonauthoritative firm guidance to assist in your response.
•Start off with the codifications (606?), then move to the non-auth. sources.
Answer:
The Hotel Co. should record the net amount it receives from Expedia.com
Explanation:
According to codification ( 606 ) The Hotel Co. should record the net amount it receives from Expedia.com
Applying codification ( 606 ) the entity( Expedia.com ) will give the agreed upon transaction price to Hotel.co as soon as a requirement is met. and that price can be based on standalone selling prices of the service or good which is defined within the contract. but if the selling price is not clear there will be an estimate of the price, note that: Transaction prices are always not the same as the standalone selling price.
Just before the year ended, a company offered to buy 4,120 units for $14.95 each. X Company had the capacity to produce the additional 4,120 units, but because the special order product was slightly different than the regular product, direct material costs were expected to increase to $2.40 per unit, and some special equipment would have to be rented for a total of $19,000.
Sales $1,225,500
Cost of goods sold 521,805
Gross margin $703,695
Selling and administrative costs 153,510
Profit $550,185
Fixed cost of goods sold for the year was $130,935, and fixed selling and administrative costs were $72,885. The special order product has some unique features that will require additional material costs of $0.90 per unit and the rental of special equipment for $3,000. Assume the following fact: regular variable selling and administrative costs include sales commissions equal to 4% of sales, but there will be no sales commissions on the special order. This will cause the special order profit to increase by:__________
Answer:
4%
Explanation:
Profit on special order = 7847.7 or 7848 Selling price 11 Variable cost special material 0.72 Cost of goods sold 6.69 Selling and administrative cost 1.02 Total variable cost per unit Particulars Per Unit 64500 Units Sales 19 1225500 Less: Variable cost Cost of Goods Sold (521805-130935) 6.06 390870 Sales commission (Sales*4%) 0
Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $63,000, and it estimates that 5% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,071 credit balance before the adjustment. (b) a $315 debit balance before the adjustment.
Answer:
A. Dr Bad debt expense $2,079
Cr To Allowance for Doubtful Accounts
$2,079
B. Dr Bad debt expense $3,465
Cr To Allowance for Doubtful Accounts $3,465
Explanation:
(a) Preparation of the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: a $1,071 credit balance before the adjustment
Dr Bad debt expense $2,079
Cr To Allowance for Doubtful Accounts $2,079
(Being bad debt expense recorded)
Bad debt expense= (Outstanding accounts receivable × uncollectible percentage) - Credit balance
Bad debt expense= ($63,000 × 5%) - $1,071
Bad debt expense= $3,150 - $1,071
Bad debt expense= $2,079
(b) Preparation of the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has:a $315 debit balance before the adjustment.
Dr Bad debt expense $3,465
Cr To Allowance for Doubtful Accounts $3,465
(Being bad debt expense recorded)
Bad debt expense= (Outstanding accounts receivable × uncollectible percentage) - Dredit balance
Bad debt expense= ($63,000 × 5%) - $315
Bad debt expense= $3,150 -+ $315
Bad debt expense= $3,465
You expect Technomess Company common stock to pay a dividend of $2.40 one year from now. You can buy the stock now for $52, and you plan to sell the stock at the end of one year. Given the risk of the stock, your required rate of return is 16%. For what price would you need to sell your stock in one year in order to earn your required rate of return
Answer:
The stock price = $57.92
Explanation:
The return on a stock is the sum of the capital gains(loss) plus the dividends earned.
Capital gain is the difference between he value of the stocks when sold and the cost of the shares when purchased.
Total shareholders Return =
(Capital gain/ loss + dividend )/purchase price × 100
16% = ((x-52) + 2.40)/52
0.16×52 = (x-52) + 2.40
8.32 = X- 52 + 2.40
52+8.32-240=X
57.92 = X
$57.92= X
The stock would need to be sold for = $57.92
What is the basic economic problem that happens because people have unlimited wants but resources are limited? *
A opportunity cost
B sunk cost
C needs
D scarcity
Answer:
D
Explanation:
Scarcity is the basic economic problem that happens because people have unlimited wants but resources are limited.
hope this helps
Suppose that there are two industries, A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The HHI for industry A is:
Answer:
3200
Explanation:
The HHI is calculated by squaring the market share of each firm in the industry.
Market share = sales of a firm / total sales of firms in the industry
total sales of firms in the industry = 5 + 2 + 1 + 1 + 1 = 10
Market share of firm A = (5/10) x 100 = 50%
Market share of firm B = (2/10) x 100 = 20%
Market share of firm C, D, E = (1/10) x 100 = 10%
50² + 20² + 10² + 10² + 10² = 3200
Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:
Dept. Sales Cost of Goods Sold Direct Expenses Indirect Expenses
1 1,080,000 708,000 102,000 88,000
2 480,000 158,000 48,000 108,000
3 780,000 308,000 158,000 28,000
a) 56.7%
b) 25.0%
c) 34.7%
d) 34.0%
e) 61.6%
Answer:
b) 25.0%
Explanation:
Calculation to determine what Department 1's contribution to overhead as a percent of sales is
First step is to calculate the Contribution to overhead
Using this formula
Contribution to overhead=Sales - Cost of goods sold - Direct expenses
Let plug in the formula
Contribution to overhead=1,080,000 - $708,000 - 102,000
Contribution to overhead= $270,000
Now let calculate the Contribution to overhead as a percent of sales using this formula
Contribution to overhead as a percent of sales=Contribution to overhead/Sales
Let plug in the formula
Contribution to overhead as a percent of sales=$270,000/$1,080,000
Contribution to overhead as a percent of sales= 25%
Therefore Department 1's contribution to overhead as a percent of sales is 25%
The following is the sales budget for Coore, Inc., for the first quarter of 2019: JanuaryFebruaryMarch Sales budget$135,000$152,000$167,000 Credit sales are collected as follows: 60 percent in the month of the sale 30 percent in the month after the sale 10 percent in the second month after the sale The accounts receivable balance at the end of the previous quarter was $96,000 ($78,800 of which was uncollected December sales). a. Compute the sales for November. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b.Compute the sales for December. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c.Compute the cash collections from sales for each month from January through March. (Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.)
Answer: See explanation
Explanation:
a. . Compute the sales for November.
This will be:
= ($96,000 - $78,800) / 10%
= $17200 / 10%
= $17200/0.1
= $172,000
b. Compute the sales for December.
This will be:
= $78800 / (10% + 30%)
= $78800 / 40%
= $78800 / 0.4
= $197000
c. Compute the cash collections from sales for each month from January through March.
January cash collection:
= ($172000 × 10%) + ($197000 × 30%) + ($135000 × 60%)
= $17200 + $59100 + $81000
= $157300
February cash collection:
= ($197000 × 10%) + ($135000 × 30%) + ($152000 × 60%)
= $19700 + $40500 + $91200
= $151400
March cash collection:
= ($135000 × 10%) + ($152000 × 30%) + ($167000 × 60%)
= $13500 + $45600 + $100200
= $159300
William is a single writer (age 35) who recently decided that he needs to save more for retirement. His 2020 AGI before the IRA contribution deduction is $66,000 (all earned income). (Leave no answer blank. Enter zero if applicable.) a. If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution William can make in 2020?
Answer: $6,000
Explanation:
As per IRS deduction rules in 2020, the maximum deductible IRA contribution for a person who does not participate in an employer-sponsored plan is $6,000.
That is therefore the maximum deductible that William can make in this scenario.
Wildhorse Co. just began business and made the following four inventory purchases in June: June 1 168 units $1008 June 10 224 units 1568 June 15 224 units 1792 June 28 168 units 1512 $5880 A physical count of merchandise inventory on June 30 reveals that there are 224 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is
Answer:
Ending inventory= $1,848
Explanation:
Giving the following information:
June 1: 168 units $1,008
June 10: 224 units 1,568
June 15: 224 units 1,792 ($8)
June 28: 168 units 1,512 ($9)
A physical count of merchandise inventory on June 30 reveals that there are 224 units on hand.
To calculate the ending inventory using the FIFO (first-in, first-out) method, we need to use the cost of the last units incorporated into inventory.
Ending inventory= 168*8 + 56*9
Ending inventory= $1,848
What is an example of a 'Sunk cost" ? *
A the price of food when cooking a meal
B. the price of a video game when buying a birthday present
C. the price of last month's car repairs when getting your car fixed
D the price of college when getting a job
Answer:
C. the price of last month's car repairs when getting your car fixed.
Explanation:
The correct option is - C. the price of last month's car repairs when getting your car fixed.
Reason -
A sunk cost is a past cost that you can’t recover.
Areas of land are divided by appropriate authorities into zones within which various uses are permitted. Thus, zoning is a technique of land-use planning as a tool of urban planning used by local governments in most developed countries. Because of the importance of zoning and regulating the manner of property use, which of the following statements is most accurate?
a. changing zoning to allow some landowner to use property other than what is permitted for that land is 'spot zoning' and unlawful in most states
b. it is almost impossible to obtain a variance in zoning
c. variances were rendered unlawful pursuant to the federal civil rights laws because they were used to discriminate against people unlawfully
d. it is possible to obtain a variance to use property for purposes other than how the property is zoned, but in granting permission for such a special use the governing entity granting such permission must use its discretion to insure compatible use and that zoning scheme is not disrupted
Answer: d. it is possible to obtain a variance to use property for purposes other than how the property is zoned, but in granting permission for such a special use the governing entity granting such permission must use its discretion to insure compatible use and that zoning scheme is not disrupted.
Explanation:
Variances are exceptions to the zoning rules and laws applied by the governing entity in charge of the zoning and enable users to use a property for other reasons that the zone permit may allow.
The type of variance being sought and the governing entity are very important because some variances are easier to get and some entities are more flexible.
In all cases however, when a variance is granted, the governing entity should ensure it uses its discretion to make sure that the variance is used well and that the zoning scheme is not disrupted.
Answer:
D. it is possible to obtain a variance to use property for purposes other than how the property is zoned, but in granting permission for such a special use the governing entity granting such permission must use its discretion to insure compatible use and that zoning scheme is not disrupted
Explanation:
Hope this helps
Journalize the entry for Hot Rod Service using the following data from the payroll register:
Regular earnings $16,370
Overtime earnings 903
Federal income tax withheld 2,268
Social Security tax withheld 827
Medicare tax withheld 194
Pension contribution from employees 711
Health insurance premiums 807
If an amount box does not require an entry, leave it blank.
Date Description Post Ref. Debit Credit
Answer: See explanation
Explanation:
Debit: Wages and Salaries Expense = $17,273
Credit: Employee Income tax payable = $2,268
Credit: Social Security tax payable = $827
Credit: Medicare tax payable = $194
Credit: Pension plan deduction payable = $711
Credit: Health Insurance premium payable = $807
Credit: Cash (Balancing Figure) = $12,466
Note that wages and salaries expense was calculated as:
= Regular earnings + Overtime earnings
= $16,370 + $903
= $17,273
Superior Company has provided you with the following information before any year-end adjustments: Net credit sales are $122,500. Historical percentage of credit losses is 4%. Allowance for doubtful accounts has a credit balance of $650. Accounts receivables ending balance is $52,000. What is the estimated bad debt expense using the percentage of credit sales method
Answer:
The estimated bad debt expense using the percentage of credit sales method is $4,250.
Explanation:
Credit losses = Net credit sales * Historical percentage of credit losses = $122,500 * 4% = $4,900
Allowance for doubtful accounts has a credit balance = $650.
The estimated bad debt expense can therefore be calculated as follows:
Bad debt expense = Credit losses - allowance for doubtful accounts credit balance = $4,900 - $650 = $4,250
Therefore, the estimated bad debt expense using the percentage of credit sales method is $4,250.
Assume there is an economy with a single bank, and the central bank sets the reserve requirement ratio at 5%. Assume also that the only bank had no transactions (i.e., no loans, reserves, or deposits) prior to an individual who deposits $2000 of currency with the bank.
a. As a result of this deposit, calculate the amount of required reserves, actual reserves, and excess reserves.
b. After the bank has issued the maximum amount of loans, what will be the total amount of loans, deposits, and money in the economy?
c. What is the size of the money multiplier for this economy?
Answer:
An Economy with a Single Bank
a. The amount of required reserves = $100
The amount of actual reserves = $100
The amount of excess reserves = $0.
b. The total amount of loans, deposits, and money in the economy
= $40,000
c. The size of the money multiplier for this economy
= 20
Explanation:
a) Data and Calculations:
Reserve requirement ratio = 5%
Customer's deposit = $2,000
Amount of required reserves
= Initial deposits multiplied by reserve ratio
= $100 ($2,000 * 5%)
Actual reserves = $100
Excess reserves = $0
Total amount of loans, deposits, and money in the economy
= Initial Deposits/Reserve Ratio
= $40,000 ($2,000/0.05)
The size of the money multiplier for this economy = Total money supply in the economy divided by the initial money deposits
= $40,000/$2,000
= 20
b) The Money Multiplier refers to how the initial deposit of $2,000 leads to a bigger final increase in the total money supply of $40,000. It means that the money multiplier is 20 or that the initial deposit of $2,000 has multiplied by 20 to $40,000.
Suppose the economy of the large country of Hendrix is currently experiencing expansion as a result of short run business cycle fluctuations. Hendrix has a trade deficit. The items below are possible effects of this expansion on the trade balance. Please sort them into boxes below as appropriate. If they do not fit into either box (e.g. not likely to occur in an expansion), leave them unsorted.
Likely to occur in an expansion and increase the trade deficit
Likely to occur in an expansion and decrease the trade deficit
private savings decrease domestic private investment increases private savings increase government borrowing decreases imports increase government borrowing increases domestic private investment decreases imports decrease
Answer:
Likely to occur in an expansion and increase the trade deficit.
Domestic private investment increasesImports increaseAs a result of expansion, there is more income in the economy which means that people will be able to invest more. The investment will however lead to more imports as capital goods are acquired. This will therefore increase the trade deficit which is defined as the difference between net exports and net imports.
Likely to occur in an expansion and decrease the trade deficit.
Private savings increaseGovernment borrowing decreasesIn an expansion, people will have more income and so will save more. As a result of them not spending these savings on imports, the trade deficit will go down.
Also with the economy in an expansion, the government would not need to borrow as much money to prop up the economy. This will reduce the trade deficit which includes loans from outside.
Schweitzer realized that in many cases individuals could only accomplish direct human service in collaboration with official organization. What he wanted was: to help fund such organizations. to be a leader in such organizations. an absolutely personal and independent activity. to increase the number of official organizations dedicated to direct human service.
Answer: an absolutely personal and independent activity
Explanation:
Since Schweitzer realized that direct human service can only be accomplished when one collaborates with an official organization, this shows that he wanted to be an absolutely personal and independent activity.
In such case, he wants an activity that will be free from the outside control. Other options are wrong as he wasn't really interested in funding of organizations, or increasing the number of official organizations that are dedicated to direct human service.