# Accounts receivable in an existing business:A) are rarely worth their face value.B) unlike inventory, are often worth their face value.C) appreciate over time due to interest and penalties.D) are not a significant consideration when buying anexisting business

The correct answer is letter "A": are rarely worth their face value.

Explanation:

Accounts receivables are notes issued to customers after selling them a product or rendering services on credit. The repayment term may vary from 30, 60 or 90 days. If an account receivable is not paid after that period it could be considered as an uncollectible account which implies the company will incur losses.

Accounts receivable are hardly ever accepted at face value (real value of the moment of the purchase) because companies add the interest rate that is to be charged for the sale on the account.

## Related Questions

A company pays each of its two office employees each Friday at the rate of \$100 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: Multiple Choice Debit Unpaid Salaries \$600 and credit Salaries Payable \$600. Debit Salaries Expense \$600 and credit Salaries Payable \$600. Debit Salaries Expense \$400 and credit Cash \$400. Debit Salaries Payable \$400 and credit Salaries Expense \$400. Debit Salaries Expense \$400 and credit Salaries Payable \$400.

Debit Salaries Expense \$400 and Credit Salaries payable \$400.

Explanation:

Consider, we are told the company pays each of its two office employees, meaning, the 2 employees combine will earn \$200 a day.

Furthermore, we are told that even though the monthly accounting period ends on Tuesday the two employees work on Monday and Tuesday, meaning, the adjusting entry to record at the month-end will be a summation of the amount earned by the two employees on the two days.  That is, = \$200 × 2 days  = \$400  (which is a salaryexpense).

Therefore, going by the rule of double-entry, we are obliged to debit salaries expense account and credit salaries payable account.

A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Now refer to the Income Statement in Chester's Annual Report. The direct labor costs for Chester were \$32,680. These labor costs could have been \$20,000 higher if investments in training that increased productivity had not been made. What was the productivity index for Chester that led to such savings?

Explanation:

Given that,

Direct labor costs for Chester = \$32,680

Labor costs could have been \$20,000 higher

Productivity index shows the ratio between the labor costs with improvements and labor costs without improvement in production.

Productivity Index =

=

= 161.1%

The productivity index for Chester, which measures the savings in labor costs due to productivity improvements, is approximately 62.06%. This suggests that, without the investments in training, Chester's labor costs would have been about 38% higher.

### Explanation:

In order to calculate the productivity index for Chester, we need to understand that the productivity index essentially measures the savings in labor costs resulting from production improvements, expressed as a percentage. In this particular case, Chester was able to save \$20,000 in labor costs due to investments in productivity-enhancing training.

The original direct labor costs for Chester was \$32,680. Had Chester not made any productivity improvements, the labor costs would have been \$32,680 plus an additional \$20,000, for a total of \$52,680. Therefore, the productivity index is calculated by dividing the original labor cost by what the labor cost would have been without the productivity improvements, and multiplying by 100, as follows: (\$32,680 / \$52,680) * 100. This equation gives a productivity index of approximately 62.06%. This means that Chester's labor costs would have been approximately 38% higher without the productivity improvements.

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Which document must a prospective buyer of an existing (resale) condominium unit receive?

Governance Form.

Explanation:

The buyer has the right to request a copy of several documents, including the Governance Form. This form summarizes the board of directors and unit rights.

​Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite wealthy and is ready to contribute money to the venture. Betty has a degree in business from an excellent university, worked for five years as a manager in a major corporation, and currently is a leadership/management consultant. Cathy is a scientist who has developed a process that will, according to her, "revolutionize cancer treatment throughout the world." Alice, Betty, and Cathy believe it is in their best interest to form a general partnership. Do you agree? Is there a more appropriate form of business you might recommend?

I agree with that, because all of them have good bussiness ideas.

Even though a general partnership might work for Alice, Betty, and Cathy, a limited liability company (LLC) or a corporation might be more appropriate due to Alice's wealth, Betty's business knowledge, and Cathy's valuable scientific process. This way, they can better protect their individual assets, as well as the venture's funding and potential expansion.

### Explanation:

While a general partnership might seem like a viable solution for Alice, Betty, and Cathy, it may not be the most optimal choice considering their individual circumstances and contributions. In a general partnership, every partner shares liability and financial commitment equally or according to their investment. Although this may initially seem fair, it might put Alice at risk since she's contributing the most financially. Instead, I'd recommend considering a limited liability company (LLC) or corporation.

In an LLC, Alice, Betty, and Cathy can limit their personal liabilities. This would allow Alice to protect her wealth while still contributing to the venture. In a corporation, the company is considered a separate legal entity. This structure can also be beneficial if they plan on seeking outside venture capital or looking into other ambitious expansion.

Remember, the final decision depends on various factors including tax considerations, business goals, and the level of desired legal protection. It is advisable to consult with a business advisor or attorney before deciding.

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2. On January 2, 2017, heavy equipment costing \$800,000 was purchased. The equipment had a life of 5 years and no salvage value. The straight-line method of depreciation is used for book purposes and the tax depreciation taken each year is listed below: Tax Depreciation 2017 2018 2019 2020 Total \$264,000 \$360,000 \$120,000 \$56,000 \$800,000 3. The enacted tax rates are 40% for all years. Instructions (a) Prepare a schedule comparing depreciation for financial reporting and tax purposes. (b) Determine the deferred tax (asset) or liability at the end of 2017.

The solution to the given problem is done below.

Explanation:

(a)            Depreciation

for Financial              Depreciation for Temporary

Year         Reporting Purposes           Tax Purposes            Difference

2017           \$160,000                          \$264,000          (104,000)

2018           \$160,000                          \$360,000          (200,000)

2019           \$160,000                           \$120,000            40,000

2020           \$160,000                           \$56,000            104,000

2021                  \$160,000                                      0                        \$160,000

\$800,000                            \$800,000                   0

(b)                        2018       2019          2020         2021           Total

Future taxable

amounts:

Depreciation     \$(200,000)      \$40,000      104,000    \$160,000    \$104,000

Deferred tax liability: \$104,000 × 40% = \$41,600 at the end of 2017.

Gilligan Co.'s bonds currently sell for \$1,150. They have a 6.75% annual coupon rate and a 15-year maturity, and are callable in 6 years at \$1,067.50. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. Under these conditions, what rate of return should an investor expect to earn if he or she purchases these bonds, the YTC or the YTM?(A) 3.92%
(B) 4.12%
(C) 4.34%
(D) 4.57%
(E) 4.81%