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Business Accounting Financial Accounting: Information for Decisions

(a) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: The balance sheet as of December 31, 2016 for MM services. Balance Sheet of MM services as on 31 s t December 2006 Liabilities Amount Amount Assets Amount Amount Owners fund Non-currentAssets Equity Capital (62900-40000) 22900 Equipment 50000 Net Income 40000 62900 Current liabilities Current Assets Creditors 2200 Cash 3600 Unearned fees 15600 17800 Prepaid rent 9400 Debtors 9600 Stock 6600 Prepaid Insurance 1500 30700 Total 80700 Total 80700 (b) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: The key financial ratios. Calculation of Key Financial ratios. Debt ratio = Total liabilities Total assets = 2200 + 15600 80700 = 0.22 Return on Asset (ROI) = Net income Average total assets × 100 = 40000 80700 × 100 = 49.5 % (c) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: Whether thedecision of taking loan of $30000 is good or not. Debt ratio shows the capacity of the borrower of repaying its debt while return on asset ratio shows the capability of the assets to generate returns out of it. As per our analysis of financial ratios and balance sheet structure, A.M.could take loan of $30000 because debt ratio of 0.22 is often considered to be less risky that means A.M. is capable of repaying his loan. Return on Asset also shows favorablei.e. 49.5% which shows that business is efficiently converting its asset into net income.

(a) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: The balance sheet as of December 31, 2016 for MM services. Balance Sheet of MM services as on 31 s t December 2006 Liabilities Amount Amount Assets Amount Amount Owners fund Non-currentAssets Equity Capital (62900-40000) 22900 Equipment 50000 Net Income 40000 62900 Current liabilities Current Assets Creditors 2200 Cash 3600 Unearned fees 15600 17800 Prepaid rent 9400 Debtors 9600 Stock 6600 Prepaid Insurance 1500 30700 Total 80700 Total 80700 (b) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: The key financial ratios. Calculation of Key Financial ratios. Debt ratio = Total liabilities Total assets = 2200 + 15600 80700 = 0.22 Return on Asset (ROI) = Net income Average total assets × 100 = 40000 80700 × 100 = 49.5 % (c) Introduction : Expansion of business means making more business activities in terms of profit and capital. Expanding also includes the physical expansion of the business as well as in terms of profitability which requires more and more human resources and also lots of finance. To determine: Whether thedecision of taking loan of $30000 is good or not. Debt ratio shows the capacity of the borrower of repaying its debt while return on asset ratio shows the capability of the assets to generate returns out of it. As per our analysis of financial ratios and balance sheet structure, A.M.could take loan of $30000 because debt ratio of 0.22 is often considered to be less risky that means A.M. is capable of repaying his loan. Return on Asset also shows favorablei.e. 49.5% which shows that business is efficiently converting its asset into net income.

Solution Summary: The author explains that expansion of business means making more business activities in terms of profit and capital.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

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Chapter 2 Solutions

Financial Accounting: Information for Decisions

Ch. 2 - Provide the names of two (a) asset accounts, (b)...Ch. 2 - What is the difference between a note payable and...Ch. 2 - Prob. 3DQ Ch. 2 - Prob. 4DQ Ch. 2 - Prob. 5DQ Ch. 2 - Should a transaction be recorded first in a...Ch. 2 - Prob. 7DQ Ch. 2 - Why does the recordkeeper prepare a trial balance?Ch. 2 - Prob. 9DQ Ch. 2 - Prob. 10DQ

Ch. 2 - Prob. 11DQ Ch. 2 - Prob. 12DQ Ch. 2 - Prob. 13DQ Ch. 2 - Prob. 14DQ Ch. 2 - Prob. 15DQ Ch. 2 - Review the Apple balance sheet in Appendix A....Ch. 2 - Prob. 17DQ Ch. 2 - Prob. 18DQ Ch. 2 - Identify the items from the following list that...Ch. 2 - Prob. 2QS Ch. 2 - Prob. 3QS Ch. 2 - Prob. 4QS Ch. 2 - Prob. 5QS Ch. 2 - Prob. 6QS Ch. 2 - Prob. 7QS Ch. 2 - Prob. 8QS Ch. 2 - Prob. 9QS Ch. 2 - Prob. 11QS Ch. 2 - Prob. 1E Ch. 2 - Prob. 2E Ch. 2 - Prob. 3E Ch. 2 - Prob. 4E Ch. 2 - Prob. 5E Ch. 2 - Prob. 6E Ch. 2 - Prob. 7E Ch. 2 - Prob. 9E Ch. 2 - Prob. 11E Ch. 2 - Prob. 12E Ch. 2 - Prob. 13E Ch. 2 - Prob. 14E Ch. 2 - A corporation had the following assets and...Ch. 2 - Prob. 16E Ch. 2 - Prob. 17E Ch. 2 - Prob. 18E Ch. 2 - Prob. 19E Ch. 2 - Prob. 20E Ch. 2 - Prob. 21E Ch. 2 - Prob. 22E Ch. 2 - Prob. 1PSA Ch. 2 - Prob. 2PSA Ch. 2 - Prob. 3PSA Ch. 2 - Prob. 4PSA Ch. 2 - Prob. 5PSA Ch. 2 - Prob. 1PSB Ch. 2 - Prob. 2PSB Ch. 2 - Prob. 3PSB Ch. 2 - Nuncio Consulting complete the following...Ch. 2 - Prob. 5PSB Ch. 2 - Prob. 2SP Ch. 2 - Prob. 1BTN Ch. 2 - Key comparative figures for Apple and Google...Ch. 2 - Assume that you are a cashier and your manager...Ch. 2 - Prob. 4BTN Ch. 2 - Prob. 6BTN Ch. 2 - Prob. 7BTN Ch. 2 - Prob. 8BTN Ch. 2 - Samsung (www.Samsung.com) is a market leader in...

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