(TCO C) Which of the following items is subject to federal income tax? (Points : 5) Interest on U.S. Treasury bonds Gambling winnings Interest on loans made in the ordinary course of business All of the above 6. (TCO B) Sam owes Bob $8,000. Bob cancels (forgives) the debt. The cancellation is not a gift, and Sam is bankrupt.
Market failure refers to a situation in which the market does not allocate resources efficiently. ANSWER: T TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxii]. Since taxes affect only the price paid by the buyer, they cannot have an adverse impact on the allocation of society’s resources. ANSWER: F TYPE: T KEY1: C SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxiii]. A monopolist has market power.
(Points : 5) sales under $1,000,000 no accountants on staff insignificant receivables and payables all sales and purchases on account 5. (TCO D) Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using _____. (Points : 5) LIFO will have the highest ending inventory FIFO will have the highest cost of goods sold FIFO will have the highest ending inventory LIFO will have the lowest cost of goods sold 6. (TCOs A, E) Equipment with a cost of $192,000 has an estimated salvage value of $18,000 and an estimated life of 4 years or 12,000 hours.
Page 484 has formulas!! 6. When the firms maintains a target leverage ratio, we compute its levered value V^L as the present value of its free cash flows using the WACC, whereas its unlevered value V^U is the present value of its free cash flows using its unlevered cost of capital or pretax WACC. 15.3 Recapitalizing to Capture the Tax Shield 1. when securities are fairly priced, the original shareholders of a firm capture the full benefit of the interest tax shield from an increase in leverage 15.4 Personal
[3] http://www.irs.gov/businesses/small/article/0,,id=146335,00.html It is important to determine if the taxpayer martially participates because this classifies the income as active or passive. Passive activity losses are non-deductable from active and portfolio income. This is why it is important to determine if the taxpayer martially participates in the business activity. PROBLEMS: 7-46) The $30,000 loss is considered a passive loss and can only be deducted against passive income, it is therefore suspended and carried forward to future years to offset potential passive income in those years. Mary has no martially participation in the rental activity, therefore the loss is considered
Federal Reserve and Monetary Policy The Federal Reserve is considered independent because, although it is accountable to Congress, its decisions do not have to be ratified by Congress or the President. The System consists of seven members who sit on the Board of Governors, and 12 regional Federal Reserve Banks in major cities throughout the United States (U.S. Federal Reserve, 2010). An indispensable element of the Federal Reserve System is the Federal Open Market Committee (FOMC). The FOMC uses three tools to affect money: * Open market operations – Buying and selling U.S. government securities. * Altering reserve requirements – The amount of funds commercial bank are required to hold in reserve
• ignore cash payouts to stockholders. • ignore the size, risk, and timing of cash flows. 5. The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio is bestdefined by its: • rate of return on assets. • internal rate of growth.
Question 9 of 20 5.0 Points ____________ is anything generally accepted as a means of paying for goods and services and for paying off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time. A.A financial asset B.A real asset C.money D.all of the above E.none of the above Question 10 of 20 5.0 Points List the five major capital market securities described in the chapter 7. Question 11 of 20 5.0 Points Which of the following is not an asset of depository institutions? A.cash B.unsecured loans C.time deposits D.U.S.
5) Information about Clearwater Company's direct materials cost follows: Standard price per materials ounce $ 100 Actual quantity used 8,700 grams Standard quantity allowed for production 9,100 grams Price variance $ 76,125 F ________________________________________ Required: What was the actual purchase price per gram? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Actual purchase price $ 91.25 Total grade: 0.0×1/1 = 0% Feedback: Actual Costs = AP × 8,700 Actual Inputs at Standard Price = $100 × 8,700 =$870,000 Price Variance = $76,125 F 8,700 × AP = $870,000 – $76,125 AP = $91.25 ________________________________________ Question 3: Score
Discuss surplus-enhancing transactions in markets 6. Explain how elasticity affects the way in which the burden of a per-unit tax is shared between buyers and sellers 7. Explain how elasticity affects the size of the deadweight loss created by a per-unit tax **NOTE: All of chapter 5 of Hubbard, Garnett, Lewis and O’Brien (2011) Microeconomics, 2nd edition, Pearson is required reading. 1. Consumer surplus The difference between the highest price a consumer is willing to pay for a good or service, and the price they actually pay.