Larkin Bonnard has just invested $180,000 in a day spa. He expects to receive income of $40,000 a year, and to have the investment for 10 years. What is the accounting rate of return?
A) 450%
B) 22.22%
C) 45%
D) 2.222%
E) 4.5%
B
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A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management. Upon investigation, the manager found that the workers were poorly motivated and not closely supervised. Midway through the quarter, an incentive program was initiated, and cash bonuses were given when workers hit their production targets. Within a short time, production output increased, but the bonuses had to be charged to the direct labor budget. This could produce a(n) ________.
A) unfavorable direct materials cost variance B) unfavorable direct materials efficiency variance C) favorable direct labor efficiency variance D) favorable direct labor cost variance
A company's income before interest expense and income taxes in 2014 and 2015 is $487,500 and $427,000, respectively. Its fixed interest expense was $125,000 for both years. Calculate the company's times interest earned ratio, and comment on its level of risk.
What will be an ideal response?
An advantage of bonds is:
A) Bonds do not affect owner control. B) Bonds require payment of par value at maturity. C) Bonds can decrease return on equity. D) Bond payments can be burdensome when income and cash flow are low. E) Bonds require payment of periodic interest.
When compared to an audit performed prior to 1900, an audit today:
A. Is more likely to include tests of compliance with laws and regulations. B. Is less likely to include consideration of the effectiveness of internal control. C. Has bank loan officers as the primary financial statement user group. D. Includes a more detailed examination of all individual transactions.