Reference no: EM131001967
Identify the accounting principle(s) applicable to each of the following situations:
a. Tim Roberts owns a bar and a rental apartment and operates a consulting service. He has separate financial statements for each.
b. An advance collection for magazine subscriptions is reported as a liability titled Unearned Subscriptions.
c. Purchases for office or store equipment for less than $25 are entered in Miscellaneous Expense.
d. A company uses the lower of cost or market for valuation of its inventory.
e. Partially completed television sets are carried at the sum of the cost incurred to date.
f. Land purchased 15 years ago for $40,500 is now worth $346,000. It is still carried on the books at $40,500.
g. Zero Corporation is being sued for $1,000,000 for breach of contract. Its lawyers believe that the damages will be minimal. Zero reports the possible loss in a note.
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Find the single premium
: If death occurs in the second year, insured will receive at time 2 only a return of the single premium paid without interest. Suppose q70 = 0.36, q71 = 0.40, and the interest rate is 100%. Find (a) the single premium, (b) 1V.
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Determine income on an accrual basis
: a. Determine income on an accrual basis. b. Determine income on a cash basis.
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Development of generally accepted accounting principles
: Certain underlying considerations have had an important impact on the development of generally accepted accounting principles. Following is a list of these underlying considerations, as well as a list of statements describing them.
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Is j greater than less than or equal to i why
: All premiums were calculated at a constant interest rate of i. B earned a constant rate of j on his investments. Is j greater than, less than or equal to i? Why?
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Problem regarding the breach of contract
: Identify the accounting principle(s) applicable to each of the following situations:
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Explain how reserves will be affecte for whole life policies
: Suppose that a mortality table used to calculate reserves is altered. Explain how the reserves will be affected, for whole life policies with a constant death benefit and level premiums.
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What will happen to the market clearing price and quantity
: Use supply and demand analysis where appropriate. Describe what will happen to the market clearing price and quantity. Make sure you explain your answers. As a part of your analyses, you should describe what happens to the supply and/or demand curves..
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Problem regarding the accounting principles
: That's what it's worth. Or, at a minimum, at $106,000." Respond to this statement with specific reference to accounting principles applicable in this situation.
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Theory of economic behavior on the actual mental processes
: Why do behavioral economists consider it helpful to base a theory of economic behavior on the actual mental processes that people use to make decisions? Why do neoclassical economists not care about whether a theory incorporates those actual mental p..
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