Answer:
Multiplier = 3.33
Explanation:
Investment / Spending Multiplier denotes increase in Income multiple times increase in causal Investment.
Multiplier = Change in Income / Change in Investment = 1 / 1 - MPC
M = ΔY/ΔI = 1/ (1-MPC)
At Equilibrium, Investment = Savings = 750. Change in Investment = 900 - 750 = 150. Change in Income = 500.
M = 500/150 = 3.33
3.33 = 1/(1-MPC)
MPC = 0.70
Fletcher is an executive at Fresnas Inc., a clothing manufacturer. He communicates with clients to analyze what features consumers desire. Additionally, he records the quality improvements that consumers and clients suggest. In this scenario, Fletcher is trying to:a. differentiate heavy users from light users. b. select the target market. c. learn whether consumers are currently satisfied with the offerings. d. differentiate the brand from the competition.e. identify the size and profitability of each consumer segment.
Answer:
C) learn whether consumers are currently satisfied with the offerings.
Explanation:
Fletcher is basically conducting a survey to determine consumer satisfaction, preferences and suggested improvements. It is very important to periodically perform consumer satisfaction surveys to get feedback about changing consumer expectations.
Consumers very quickly assume that better services or better products should be the norm. For example, a PC manufacturer starts to expand their product warranty from one year (industry standard) to three years. Soon customers will expect that all PC manufacturers offer the three year warranty.
If consumer expectations are important for most goods and services, they are vital and extremely important for clothing manufacturers. Clothing styles change every season, so consumers expect radical positive changes every few months.
During the lookback period of July 2017 to June 2018, Adventure Ski LLC reported federal employment taxes for the four quarters as follows: $15,200, $15,800, $4,200, and $17,600. Therefore, in 2019 they will be required to:
Answer:
Adventure Ski LLC will file a form 941 for the four-quarter period. That is for total amount of $52,800.
Explanation:
When filing form 941 in 2019 it will be against four quartets from July 2017 to June 2018. The companie's tax obligation will be on 15,200+15,800+4,200+17,600 =$52,800
The guideline for tax payment is:
1. When the amount filed is below $50,000, tax deposits are made monthly.
2. For tax payments above $50,000 tax deposits are semi-weekly.
It is important to note that when deposits are delayed by 1 to 5 days the company will be fined 2%. Delay of 6 to 15 days will attract a fine of 5%.
During the lookback period of July 2017 to June 2018, Adventure Ski LLC reported a total of $52,800 in federal employment taxes. Therefore, in 2019, they will be considered a semi-weekly depositor as their tax liability exceeded $50,000 during the lookback period.
Explanation:The question refers to federal employment taxes and a lookback period. The lookback period is a specific 12-month period used by the IRS to determine how often a business needs to deposit their employment taxes (monthly or semi-weekly). In this case, the lookback period is from July 2017 to June 2018.
The total federal employment taxes reported by Adventure Ski LLC during this time is the sum of the four quarters: $15,200 + $15,800 + $4,200 + $17,600 = $52,800.
In 2019, if Adventure Ski LLC's total tax liability during the lookback period is $50,000 or less, they are a monthly depositor. If it's more than $50,000, they are a semi-weekly depositor. Therefore, given that their tax liability during the lookback period was $52,800, Adventure Ski LLC will be considered a semi-weekly depositor in 2019.
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Trade-offs force society such as what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced. Which of the following countries has an economy where the government makes these decisions?
A. Canada.
B. The United States.
C. Japan.
D. North Korea.
Answer:
D. North Korea
Explanation:
Unlike other three nations provided as options, North Korea is a communist nation.
The central problems of an economy relate to answering the three questions of what to produce, how to produce and for whom to produce.
In a communist nation such as North Korea, the government is the supreme authority and citizens of such a nation do not exercise any influence or control on the output which shall be produced.
All the economic decisions are taken by the ruling government in such nations.
Hence, the correct answer is option (D). North Korea
Companies typically start their international foray with ________, which involves working through independent intermediaries who sell their products abroad.
a) indirect exportingb) licensingc) franchisingd) direct exportinge) joint ventures
Answer:
A. Indirect exporting
Explanation:
An indirect export is a method of selling in the international market by a company in which they sell their products to an individual or an organisation that will act as an intermediary between the company and its potential customers in that country. It is most a method of entering a new market and it is most useful because it comes with lesser cost and risk as these risks and costs is transferred to the intermediaries acting on behalf of the company in that country.
Amy agreed to a contract price of $100,000 for a home and secured a mortgage loan for $80,000. If the appraised value is $110,000, what is the loan to value ratio?
Answer:
loan to value = 80%
Explanation:
given data
contract price = $100,000
mortgage loan = $80,000
appraised value = $110,000
solution
we get here loan to value ratio that is
loan to value = [tex]\frac{loan}{contract\ price}[/tex] .................1
here lender use less of contract price or appraised value
so put here value in equation 1 we get
loan to value = [tex]\frac{80000}{100000}[/tex]
loan to value = 0.80
loan to value = 80%
HELP PLEASE BRAINLEST It is ethical to hold negative opinions about people. Please select the best answer from the choices provided T F
Answer:
True
Explanation:
The given statement that holding negative opinions over other people is ethical is completely false.
What are opinions on ethics?Weak negative ethical theories aim to lessen suffering and increase happiness, yet they are frequently accused of giving pain a greater priority than happiness.
The belief that morality is merely a matter of opinion ultimately acts as a barrier to moral reflection and ethical thought.
This is exactly what the inclination to view moral issues as subjective viewpoints do. The outright assertion that the solution to any moral quandary is a matter of opinion stops investigation before it even gets going.
It is typically regarded as positive to be tolerant of different moral worldviews. Moral difficulties can evoke strong emotions in various people, making it appear disrespectful to correct them.
Therefore, as a result, it is completely false and unethical to hold negative opinions about people. Hence, false is the answer.
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The concept that under the right circumstance, groups are smarter than the individuals in them is referred to as _____. A. crowdsourcing B. social networking C. wisdom of the crowds D. anticonsumption E. folksonomy
Answer:
c. wisdom of the crowds
Explanation:
Wisdom of the crowds -
According to this concept , the larger group of people are smarter than any individual expert , in the process of innovation , decision making and problem solving is referred to as wisdom of the crowds.
This very concept was first given by James Surowiecki .
Hence, from the given scenario of the question,
The correct term is wisdom of the crowds .
What is the process of dividing a broad target market into subsets of consumers, businesses, or countries who have similar needs, interests, or demand characteristics?
Answer:
Market segmentation
Explanation:
Market segmentation is the process of dividing a market of potential customers into groups, or segments, based on different characteristics.
Markets can be segmented on the basis of socio-economic groups (income), age, location, gender, lifestyle, use of the product (home/work, leisure/business..) etc. Each segment will require different methods of promotion and distribution. For example, products aimed towards kids would be distributed through popular retail stores and products for businessmen would be advertised in exclusive business magazines
Market segmentation makes marketing cost-effective, as it only targets a specific segment and meets their needs. it also leads to higher sales and profitability and also Increases opportunities to increase sales .
Without adjusting for PPP, emerging economies contribute about 30% of the global GDP. Adjusting for PPP, they now contribute approximately 50% of the global GDP. The reason there is a huge difference between the two measures is because
Answer:
A) the cost of living in emerging economies tends to be lower than that in developed economies.
Explanation:
It is usually cheaper to live in emerging countries than on developed countries. Generally speaking, the salaries in emerging countries are much lower than salaries at developed nations, for example a Chinese worker earns on average approximate $12,077 per year, while an American worker earns $44,720 per year. Chinese workers live with their salary and their families also live with it, so we can assume that living in China is cheaper than living in the US.
The purchasing power parity (PPP) is adjusted by the difference in relative prices between countries, e.g. a house in Switzerland costs 10 times as much as a house in Mexico.
Which of the following does a firm possess when it can outperform other firms in the same industry or the industry average over a prolonged period of time?1. consistent power position2. sustainable competitive advantage3. strategic positioning4. long-term capital gain
Answer:
sustainable competitive advantage
Explanation:
Sustainable competitive advantage refers to the abilities of a company that allows the company or firm to outperform its competitors and provide a superior or favorable long term position over competitors.
It allows the firm to have better sales, more profit margin, more customers and a larger market share than its competitors in the same industry
A company sells horse shoes. The company's fixed and variable costs are modeled by the function C(x)=5.6x+1,200. Their revenue is modeled by the function R(x)=7.4x. If x represents the number of horse shoes, how many do they have to sell to break even? Round your answer up to the nearest whole number, and do not include units.
Answer:
667 horse shoes
Explanation:
Given that,
The company's fixed and variable costs are modeled by the function
Cost function: C(x) = 5.6x + 1,200
Revenue function: R(x) = 7.4x
x ⇒ represents the number of horse shoes
For break even,
Cost = Revenue
5.6x + 1,200 = 7.4x
7.4x - 5.6x = 1,200
1.8x = 1,200
x = 667
Therefore, they have to sell 667 horse shoes to break even.
Suppose that in Mexico, it takes three labor hours to produce one shirt and 15 labor hours to produce one computer. Suppose that in the United States, it takes two labor hours to produce one shirt and 4.5 labor hours to produce one computer. Which country has the comparative advantage in the production of computers, and why?
The United States has a comparative advantage in producing computers because, given the number of labor hours required in each nation, the US sacrifices fewer shirts to produce one computer compared to Mexico.
Explanation:The principle of comparative advantage suggests that each country should specialize in the provision of goods for which it requires fewer resources or less time for production. In this case, we look at the number of labor hours required to produce one unit of a good: a shirt or a computer, in Mexico and the United States.
In Mexico, it requires 3 labor hours to produce a shirt and 15 labor hours to produce a computer. So, producing a computer in Mexico takes the equivalent of 5 shirts (15/3).
In the United States, it takes 2 labor hours to produce a shirt and 4.5 labor hours to produce a computer. Hence, producing a computer in the United States takes the equivalent of 2.25 shirts (4.5/2).
Given these ratios, the United States has a comparative advantage in producing computers because it sacrifices fewer shirts to produce a computer, compared to Mexico.
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Philosophers draw a distinction between positive statements, which describe the world asit is, and ___________________s, which describe how the world should be.
A. normative statement
B. budget constraint
C. trade-of
D. opportunity cost
Answer:
Normative statement
Explanation:
A normative comment makes a conclusion on meaning. Such a decision is the presenter's viewpoint; nobody can "confirm" whether or not the comment is true. Since individuals have different principles, ethical pronouncements also create discord.
An economist whose beliefs allow him to claim that we ought to provide more help to the needy will compete with one whose ideals contribute to a determination that we ought not.
It is not uncommon for people to present an argument as constructive, to render it more compelling for an audience when it already has negative elements. Sources of this are opinion pieces in magazines or on other outlets. That is why it is critical that we can distinguish among constructive and negative statements.
Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation. Gross income - $ 60,746,000 Total sales - 58,538,000 Total credit sales - 31,978,000 Net income - 7,158,000 Cost of goods sold - 30,324,000 Total assets - 15,067,000 Average inventory - 8,211,000 Average receivables - 4,922,000Receivable turnover = _______.Inventory turnover = _______.Asset turnover = ________.
Answer:
Receivable Turnover= 11.89
Inventory Turnover = 3.69
Asset Turnover= 3.885
Explanation:
Receivable Turnover = Net Sales/ Average Account Receivable
Receivable Turnover = 58,538,000/ ( beginning AR + Ending AR)/2
Receivable Turnover = 58,538,000/ 4922,000
Receivable Turnover= 11.89
Inventory Turnover = Cost of Good Sold/ Average Inventories
Inventory Turnover = Cost of Good Sold/ ( beginning Inv + Ending Inv )/2
Inventory Turnover = 30,324,000/8211000
Inventory Turnover = 3.69
Asset turnover= Net Sales/ Average Total Assets
Asset turnover= 58,538,000/ 15,067,000
Asset Turnover= 3.885
The receivable turnover is approximately 6.49, the inventory turnover is approximately 3.69, and the asset turnover is approximately 3.89.
Explanation:The receivable turnover is calculated by dividing the total credit sales by the average receivables. In this case, the receivable turnover is $31,978,000 divided by $4,922,000, which equals approximately 6.49.
The inventory turnover is calculated by dividing the cost of goods sold by the average inventory. In this case, the inventory turnover is $30,324,000 divided by $8,211,000, which equals approximately 3.69.
The asset turnover is calculated by dividing the total sales by the total assets. In this case, the asset turnover is $58,538,000 divided by $15,067,000, which equals approximately 3.89.
Goods X and Y are perfect substitutes. When the market price of good X is $5/unit, firm F produces 500 units of X. When the price of Y rises, 100 consumers of Y shift to the consumption of good X. This causes industry analysts to think that firm F will increase quantity supplied of X to match this increased demand. This conclusion is flawed because___________.
Answer:
According to this situation, we assume that firm F is the only producer of product X.
Explanation:
A perfect replacement is a condition in which two items are considered equal. Great replacements are goods and you can't build a brand whereby consumers like the commodity.
Except for a market price, optimal substitution suppliers must have no impact on the quality.
Therefore, in this situation product Y's price rises, so people shift for product X. In results, firm F had to increase his supply which shows that firm F is the only producer of product X in the industry.
A cost system determines the cost of a cost object by ________. assigning and then accumulating costs assigning costs accumulating costs accumulating and then assigning costs
Answer:
Accumulating and then assigning costs
Explanation:
A cost accounting framework (likewise called item costing framework or costing framework) is a system utilized by firms to gauge the expense of their items for painfulness examination, stock valuation and cost control. Evaluating the exact expense of items is basic for productive tasks.
Cost accumulation includes the utilization of a proper cost bookkeeping framework to gather cost data.
A cost system determines the cost of a cost object by assigning costs first and then accumulating them. This process ensures that all relevant costs are considered and provides an accurate representation .
A cost system determines the cost of a cost object by assigning and then accumulating costs.
Let's break down the process step-by-step:
1. Assigning costs: In this step, the cost system identifies and assigns costs to the cost object. A cost object can be a product, service, project, or any other entity for which costs need to be determined. For example, if the cost object is a product, the cost system will identify and assign costs such as direct materials, direct labor, and overhead expenses to that particular product.
2. Accumulating costs: Once the costs are assigned, the cost system accumulates these costs. Accumulation involves gathering and recording all the costs related to the cost object. This includes both direct costs (e.g., direct materials and direct labor) and indirect costs (e.g., overhead expenses).
By assigning and then accumulating costs, the cost system provides a comprehensive view of the total cost incurred for the cost object. This information is crucial for decision-making, budgeting, pricing, and evaluating the profitability of the cost object.
In conclusion, a cost system determines the cost of a cost object by assigning costs first and then accumulating them. This process ensures that all relevant costs are considered and provides an accurate representation of the total cost incurred.
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Based on Trompenaars's value dimensions, in which of the following cultures do managers separate their work and private lives, and tend to be open and direct when communicating with coworkers?
A) diffuse-oriented
B) specific-oriented
C) universalistic
D) particularistic
Based on the Trompenaar's value dimensions the culture that separate the work and the private lives of the manager is the specific oriented value
Explanation:
There are seven basic values based on which each of them are defined and the dimension that allow the people to keep their private lives and their work life different is called as specific oriented culture
The other dimensions also includes the difference between the national cultures and they developed the model in each cultures and they can help the people to understand the basic differences
Bill drives faster than the speed limit only when his friends are in the car with him, because they tell him he is cool. Bill's behavior of driving over the speed limit only when his friends are with him is said to be under ____________ control.
Answer:
STIMULUS
Explanation:
In biology, a cause is a measurable change to the internal or external state of an individual's physical or chemical framework. When a stimulus is delivered to a sensory receptor, by stimulation transduction it usually elicits or affects a response.
Therefore, Bill's behavior of speeding over the legal limit is also said to be included in STIMULUS regulation while his buddies are with him.
A company's activities for year two included the following: Gross sales $3,600,000 Cost of goods sold 1,200,000 Selling and administrative expense 500,000 Adjustment for a prior-year understatement of amortization expense 59,000 Sales returns 34,000 Gain on sale of stock portfolio securities 8,000 Gain on disposal of a discontinued business segment 4,000 Unrealized gain on AFS debt portfolio securities 2,000 The company has a 30% effective income tax rate. What is the company's net income for year two?
Answer:
$1,273,300
Explanation:
The computation of the net income is shown below:
= Gross sales - sales returns - Cost of goods sold - Selling and administrative expense - prior-year understatement of amortization expense + Gain on sale of stock portfolio securities + Gain on disposal of a discontinued business segment - income tax expense
where, income tax expense would be
= ( Gross sales - sales returns - Cost of goods sold - Selling and administrative expense - prior-year understatement of amortization expense + Gain on sale of stock portfolio securities + Gain on disposal of a discontinued business segment) × income tax rate
= ($3,600,000 - $34,000 - $1,200,000 - $500,000 - $59,000 + $8,000 + $4,000) × 30%
= $545,700
So, the net income would be
= $3,600,000 - $34,000 - $1,200,000 - $500,000 - $59,000 + $8,000 + $4,000 - $545,700
= $1,273,300
The net income for Year Two is $1,339,800.
Explanation:In order to calculate the net income for Year Two, we need to consider the various revenues and expenses.
First, we need to calculate the operating income. Operating income is calculated by subtracting the cost of goods sold and selling and administrative expenses from the gross sales. Therefore, the operating income for Year Two is $3,600,000 - $1,200,000 - $500,000 = $1,900,000.
Next, we need to consider the various gains and adjustments. The gain on sale of stock portfolio securities, gain on disposal of discontinued business segment, and unrealized gain on AFS debt portfolio securities are all non-operating gains. These gains are added to the operating income. Therefore, the total income before taxes is $1,900,000 + $8,000 + $4,000 + $2,000 = $1,914,000.
Finally, we need to consider the income tax. The effective income tax rate is 30%, so the income tax expense is $1,914,000 x 0.30 = $574,200.
Therefore, the net income for Year Two is $1,914,000 - $574,200 = $1,339,800.
If firms reduce investment spending and the economy enters a recession, which of these contributes to the adjustment that causes the economy to return to its long-run equilibrium?
Answer:
If workers agree to accept lower wages
Explanation:
Recession is a business situation in which economic activities are at a decline as a result of reduction in spending.
When this occurs, it affects firms and their investments and as such firms have to reduce their investment to ensure that the firm stays afloat and also trying to stabilize the economy. As part of trying to stabilize the economy, workers have to agree to accept lower wages till the economy is at equilibrium again. Accepting lower wages returns the economy to long-run equilibrium.
Cheers.
Savvy Skin Care, a U.S.-based beauty products manufacturer, has set up a manufacturing plant in Hong Kong. This is an example of_________.
a.global rivalry.
b.the globalization of markets.
c.exporting.
d.foreign direct investment.
e.international trade.
Answer:
Foreign Direct Investment
Explanation:
If Savvy Skin Care, is a U.S.-based beauty products manufacturer and has set up a manufacturing plant in Hong Kong. This is an example of Foreign Direct Investment.
Foreign Direct Investment (FDI) is when an a firm or individual in one country makes investment into business interests in another country.
In the scenario above, Savvy Skin Care is a firm in the U.S. but is making investments in pursuit of business in another country. This is an exact example of Foreign Direct Investments
Skyscape, a company that manufactures computer processors, launched a new product called chipone. this launch was a countermove against another product launched by greenchip, skyscape's competitor. which of the following strategies was used by skyscape to defend its market share?
A. response strategy
B. amalgamation strategy
C. recovery strategy
D. acquisition strategy
Answer:
Letter A is correct. Response strategy.
Explanation:
The alternative that best suits the strategy used by the Skyscape company is the response strategy, whose main objective is the development and implementation of strategic actions so that the company can achieve better opportunities and reduce the risks associated with the market.
This strategy helps to prevent and monitor the risks inherent to the internal and external environment of the business.
In the real business cycle model, this best explains an increase in real GDP above the full-employment level?
Answer:
a positive technology shock
Explanation:
Technology is part of the capital factor of production, and it is the most important way of increasing the quality of capital. An increase in the quality of capital means that given a same amount of capital (e.g one machine), labor will be able to produce a larger output (an increase in productivity). Technological improvements are usually achieved through research and development.
Technological improvements also affect the land factor since they can reduce the use of natural resources and wastes, although the largest impact is usually made on labor productivity.
When a country's productivity increases, real GDP might increase above full employment level because less workers are needed to produce larger outputs.
Which of the following group of countries is more likely to lag in terms of green practices, according to the IBM study mentioned in the text?
a.North America
b. All are at about the same level
c.Western Europe
d.None of the above
e.Asia Pacific
Answer:
Correct answer is A. North America
Explanation:
IBM environmental study report the list countries according to their responses to the green practice which indicate that North America is likely to lag in the eco-friendly activities.
A software vendor pitches a new sales force automation software product to your company's VP of Sales and Marketing. Before purchasing such a product, it is essential to:
Answer:
Before purchasing such a product, it is essential to:
Consider all five components of the information system
Explanation:
Before making any software purchase, it is always imperative to consider all the five components of the information system(IS). An information system can be defined as an integrated set of components that work in co-ordination to convert raw data to usable information. An information system constitute the following components; hardware, software, database, network and people. All these components have to work as a group to achieve quality output.
1. Hardware
Hardware are all the input and output devices, processor, media devices and operating system.
2. Software
Software is a set of various programs and processes that utilizes the data for processing.
3. Database
Database refers to a group of data that has been organized in a particular fashion. The data in a database has to be structured in a certain way in order to be executed.
4. Network
A network is a system of communication devices that acts as a channel to move the information around.
5. People
The people are the human resource that are to operate the software.
Managers’ responsibilities in an organization include decision making and continuous feedback. Of the three direct responsibilities of a manager, which one covered comparing the actual results to the budget the manger is responsible for?
Answer:
It is called controlling
Explanation:
Controlling has to do with ensuring that actual result is in line with target objectives or budget and where there is variance, this is investigated and corrective actions are taken .
Sometimes, this is called management by objectives. At the beginning of the period, budgets are prepared but most times, things may not work out as planned. Hence, there is need for controlling the results to ensure that organization's objectives are ultimately achieved.
A statement that makes a factual claim about how the world actually works is called a positive statementA statement that makes a claim about how the world should be is called a normative statement Innovation refers too A new producto A truly new idea
Answer:
A statement that makes a factual claim about how the world actually works is called a positive statement. A statement that makes a claim about how the world should be is called a normative statement TRUE
Innovation refers to: a new product or service
Explanation:
Positive statements can be tested, and therefore they can be corrected. E.g. the US economy is the largest in the world.
Normative statements are based on values, judgments, and opinions, there is no clear right or wrong. E.g. the US economy is the best in the world.
In order for a new idea to become an innovation, it must be converted into a new product or service, or improve an existing product or service. Science generates ideas, but technology is the application of those ideas, it generates innovations.
In Social Studies, positive statements make factual claims about how the world works, while normative statements express opinions about how the world should be. Innovation refers to new products or ideas that bring about change and improvement.
Explanation:In Social Studies, a statement that makes a factual claim about how the world actually works is called a positive statement. It is based on evidence and can be proven true or false. On the other hand, a statement that makes a claim about how the world should be is called a normative statement, which is subjective and opinion-based.
In terms of innovation, it refers to a new product or a truly new idea that brings about change and improvement. Innovation can occur in various fields such as technology, science, and business.
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A broker produces a supposedly ready, willing and able buyer. At closing, the seller is unable to provide marketable title to the property and the buyer cannot come up with the financing to purchase the home. Is the broker due a commission?
Answer:No
Explanation:By sense of duty, the broker should be should be considered for a commission .But by reasonable conclusion,No.This is to buttress that point,that commissions are only paid on sales.There was no sale so no commission for the broker.This justify the saying that effort is not enough but result. The broker should have properly validated all the documents before bringing in a buyer.It sure part of his duty.The broker is therefore entitled to no commission on negligence of duty
Chelsea is a listing agent working for the listing broker and encounters a customer at the open house. The customer asks Chelsea if she could recommend an offering price. Chelsea should recommend that the customer:
Answer: NO, Chelsea is responsible to the seller and not to the buyer.
Explanation: A listing agent is a person or an organisation who acts as a third party in a business transaction mandated to represent the agent of his or her principal in this case the seller. Chelsea is a listing agent he is expected to work as agreed with his principal who is the seller. Recommending a price to the seller will mean that he is betraying the agreement between him and his principal who is the seller. The customer has to source for an agent who is specialized in price negotiation to give the recommended price or stand on his behalf
The accounting principle that guides accountants, when faced with a recognition dilemma, to choose the alternative that produces the lowest net income is referred to as:___________________.
Answer:
Conservatism
Explanation:
Conservatism also known as the "doctrine of prudence" is a principle where by the accountant plays safe by anticipating future losses without considering future gains.
The Conservatism Principle in accounting encourages professionals to choose the option that results in the lowest net income when faced with a recognition dilemma. The principle aims to prevent the overstatement of income.
Explanation:The accounting principle that guides accountants, when faced with a recognition dilemma, to choose the alternative that produces the lowest net income is referred to as the Conservatism Principle. This principle advises accountants to err on the side of caution when preparing financial statements – if there are two equally-likely estimations, accountants should go with the one that will show less net profit, or a greater loss. It doesn't mean to understate income, but to avoid overstating it. Its purpose is to reduce the risk of overestimation but can result in reporting lower net income.
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