During the taking of its physical inventory on December 31, 2010, Barry's Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows:
A) assets overstated by $80,000;retained earnings understated by $80,000; net income statement understated by $80,000.
B) assets overstated by $80,000;retained earnings understated by $80,000; no effect on the income statement.
C) assets and retained earnings overstated by $80,000; net income overstated by $80,000;.
D) assets and retained earnings overstated by $80,000; net income understated by $80,000.
C
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Which one of the following items is not included in cash?
a. A bank certificate of deposit for one year b. A savings account at the bank c. A checking account at the bank d. All of the above are included in cash
When predicting cost behavior, the volume of production for which the fixed and variable cost relationships are assumed to hold true is called the:
A) true range. B) regression area. C) dependent variable area. D) relevant range.
A call option allows the buyer to
A. sell the underlying asset at the exercise price on or before the expiration date. B. buy the underlying asset at the exercise price on or before the expiration date. C. sell the option in the open market prior to expiration. D. sell the underlying asset at the exercise price on or before the expiration date and sell the option in the open market prior to expiration. E. buy the underlying asset at the exercise price on or before the expiration date and sell the option in the open market prior to expiration.
An investor is considering starting a new business. The company would require $475,000 of assets, and it would be financed entirely with common stock. The investor will go forward only if she thinks the firm can provide a 13.5% return on the invested capital, which means that the firm must have an ROE of 13.5%. How much net income must be expected to warrant starting the business?
A. $52,230 B. $54,979 C. $57,873 D. $60,919 E. $64,125