Fred Started His New Landscaping Business with a Commercial Loan

question 72

Multiple Choice

Fred started his new landscaping business with a commercial loan.He uses his credit card to pay for weekly supplies such as fertilizer and mulch.Business growth has been slow and Fred is having a difficult time keeping up with his monthly loan and credit card payments.He is now considering borrowing against his home to stay current with his initial loan and for other needed expenses.Fred's business is MOST at risk because ________.

• A) Fred has not acquired enough customers.
• B) Fred's home may not have enough equity to qualify him for an additional loan.
• C) Fred is taking on too much debt.
• D) Fred's business does not have enough revenue.
• E) Fred is too lenient on the terms of collection.

Comprehend the importance of equivalent units in the calculation of product costs.

Identify the characteristics of operational costing and where it is appropriately applied.

Understand how materials, labor, and overhead costs are accounted for and allocated in process costing.

Recognize the treatment of abnormal spoilage in process costing.

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Definitions:

Recognized Loss

A realized loss on investments or assets reflected in a company's financial statements.

Consolidation Process

The consolidation process involves combining the financial statements of separate companies, typically within the same corporate group, to form a single set of financial statements as if they were one entity.

Subsidiary

A company that is completely or majority-owned by another company, referred to as the parent company, which controls its operations and policies.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's shares at certain times during their life, usually at the discretion of the bondholder.