Mercedita’s business is had just opened last year. She buys products online and also sells them online. Her business had been earning a profit since then. To obtain how much she earned, Mercedita just deducts all her costs and expenses from her total sales. She wants to know if the method she is using will benefit the business the most. 1. What method is she applying for the business? 2. What would you recommend to Mercedita.

Mercedita’s business is had just opened last year. She buys products online and also sells them online. Her business had been earning a profit since then. To obtain how much she earned, Mercedita just deducts all her costs and expenses from her total sales. She wants to know if the method she is using will benefit the business the most. 1. What method is she applying for the business? 2. What would you recommend to Mercedita.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 11DQ

See similar textbooks

Similar questions

Requirement: She wants advice on stopping her business to pursue education, as she can't imagine going down both paths simultaneously. If Sky decides to continue with the business, she wants to emphasize ethics as she believes that is the best long-term approach. Any advice on this aspect of business, and her situation specifically, would be appreciated. Sky wants to rent a small retail space for $2,000 a month. Sky expects that her current sales volume would double in 2023 if she went in this direction. With either the online or storefront approach, Sky would need to invest in new machinery which could either be purchased for $10,000 or leased for $200 a month (5 year lease). The machinery is expected to last five years and Sky expects the usage to be pretty consistently annually but there would be higher usage in the summer months. She is wondering what the appropriate accounting and tax treatment for the machinery would be. If Sky were to purchase the machine outright, she could…
Pick only one option: The owner of Tommy's Technicians has found that his shop is losing money and he is in jeopardy of going out of business. Sales have remained constant for quite some time and now he is looking at ways to cut expenses to stay in business. Which of the following expenses is his best choice to try to immediately reduce and save him meaningful dollars so he can remain in business? (Hint: First consider which ones he has ultimate control over?) Rent expense Utilities expense Payroll expense Shop insurance expense Advertising expense
Natalie and her friend Curtis Lesperance decide that they can benefit from joining Cookie Creations and Curtis's coffee shop. In the first part of this problem, they come to you with questions about setting up a corporation for their new business. Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie's business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use the premises Curtis currently rents to give her cookie-making classes and demonstrations of the mixers that she sells. Natalie will also hire, train, and supervise staff to bake the cookies and muffins sold in the coffee shop. By offering her classes on the premises, Natalie will save on travel time going from one place to another. Another advantage is that the coffee shop will have one central location for selling the mixers. The current market values of the assets of both businesses are as follows. Curtis's…
The factory has to pay the VAT to SARS (South African Revenue Ms. Rennet is a retired advocate. She always wanted to be a business woman, her, she decided to start a business which specialises in selling handbags. but did not have the time to fulfil her dream. With the money that was paid out to Ms. Rennet must pay VAT (Value Added Tax) to the factory for the bags. QUESTION 3 Ms Rennet buys the bags directly from the factory Service). When customers buy bags from Ms. Rennet they pay VAT to her and she has to pay VẬT to SARS. PLEASE NOTE: Ms Rennet will not pay all the VAT that she receives from her customers to SARS, The VAT that she has to pay to SARS is the difference between what she received from her customers and what she paid to the factory.. Ms. Rennet buys 500 handbags from the factory at R 120 each (excluding VAT). She then sells the handbags to her customers for R 190 each (VAT inclusive) 3.1 Calculate how much VAT the factory has to pay to SARS for the bags that Ms. Rennet…
John Covington, a college student, wants to start a small-scale painting business during his off-school hours. To economize the start-up business, he decides to purchase some used painting equipment. He has two mutually exclusive options: (B1) Do most of the painting by himself by limiting his business to only residential painting jobs or (B2) purchase more painting equipment and hire some helpers to do both residential and commercial painting jobs. He expects option B2 will have a higherequipment cost but provide higher revenues as well. In either case, he expects to fold the business in three years when he graduates from college.The cash flows for the two mutually exclusive alternatives are given as follows: With the knowledge that both alternatives are revenue projects, which project would John select al MARR = 10%? (Nole that both projects are profitable at 10%.)
Vera decides to set up a business selling flowers. She gets up early in the morning, visits the market, and then sets up a stall by the side of the road. For the first year, all goes well. She sells all the flowers she is able to buy and she derives some income from the business However, Vera feels that she could sell more flowers if she was able to transport more to the place where she sells them, and she also knows that there are several other roads nearby where she could sell flowers, if she could be in two places at once. She could achieve these two things by buying a van and by employing other people to sell flowers in other locations. Vera needs more money to achieve this expansion of her business. She decides to ask her rich friend Peter to invest in the business. Peter can see the potential of Vera's business and wants to invest, but he doesn't want to be involved in the management of the business. He also does not want to have ultimate liability for the debts…
Susan plans on selling her mugs. She has created two scenarios and wants to know which will provide her the better profit. In order to help her figure this out, she asks you to figure out when the two options are the same. Option 1: Sells at a local store. It costs her $445 for a shelf at the store, but it's in an upscale neighborhood that gets lots of foot traffic so she can sell the mugs for $30 in profit. Option 2: Sell at the local farmers market. It costs her $100 for a booth, but busy can vary quite a bit. She figures she call sell the mugs for a $7 profit. When are the two options the same?
16) Hester wants to run her own picture framing business, but she doesn't want to start it from scratch. She decides to buy an existing business. What is one advantage of doing 16) this? A) It eliminates all the guesswork inherent in starting a new business. B) It allows her to know the problems the business already has. C) It provides a built-in network of customers, suppliers, and distributors. D) It gives her the freedom to develop exactly the business she wants. E) It eliminates all the costs Hester would normally have in starting a business.
Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking even for the past two years, it has not been able to generate a profit. For him to keep the shop open, he needs to earn at least $12,000 in operating income next year. You agree to help Lorenzo and ask him for some current information about his products' selling price and costs. You tell him you will work through some possible scenarios that might involve changing his sales price to generate the number of units sold needed to reach his target profit. Lorenzo shares the following information with you as you ponder different scenarios to help your client. Selling price $7.50 Cost for paper, per unit $0.70 Cost for printing, per unit $1.10 Cost for film, per unit $0.60 Staff salaries $48,000.00 Other operating costs $12,120.00 Using Lorenzo's data and proper Excel formulas, first, plan to get an understanding of Lorenzo's financial situation based on breakeven. Then look at…
Two different questions..
Vera decides to set up a business seliog tovers, She gets up early in the moming. Viits ne market, and then sets up a stall by the side of the road. For the frst year. al goes well. She sells all the flowers she is able to buy and she derives some income from the business However, Vera feels that she could sell more fiowers if she was able to transport more to the place where she sells them, and she also knows that there are several other roads nearby where she could sell flowers, if she could be in two places at once. She could achieve these two things by buying a van and by employing other people to sel flowers in other locations Vera needs more money to achieve this expansion of her business. She decides to ask her rich friend Peter to invest in the business. Peter can see the potential of Vera's business and wants to invest, but he doesn't want to be involved in the management of the business. He also does not want to have ultimate liability for the debts of the business if it…
You and two friends have identified a gap in the market in your hometown for work-from-home business clothing. This clothing is functional, comfortable and looks smart in online conferences and meetings. You decide to start a new business designing and manufacturing the clothing. Identify and explain the legal form of ownership you believe would be best for your business. Justify your choice.