Diaz Company Had the Following Comparative Balance Sheet Information for 2014

question 11

Essay

Diaz Company had the following comparative balance sheet information for 2014 and 2013at the end of Year 2 and Year 1: $\begin{array}{l}\hline \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text {Diaz Company }\\\hline \quad\quad\quad\quad\quad\quad\quad \text {Comparative Balance Sheets} \\\begin{array}{|l|}\hline\\\hline\\\hline \text { Cash}\\\hline \text {Accounts receivable}\\\hline \text {Inventory}\\\hline \text {Prepaid insurance}\\\hline \text {Property, plant and equipment}\\\hline \text {Accumulated depreciation}\\\hline \text {Total}\\\hline\\\hline \text {Accounts payable}\\\hline \text {Bonds payable}\\\hline \text {Common stock}\\\hline \text {Retained earnings}\\\hline \text {Total}\\\hline\end{array}\begin{array}{l|}\hline 2014 \\\hline \\\hline 30,000 \\\hline 48,000 \\\hline 158,000 \\\hline 10,000 \\\hline 70,000 \\\hline(14,000) \\\hline 302,000 \\\hline \\\hline 14,000 \\\hline 90,000 \\\hline 140,000 \\\hline 58,000 \\\hline 302,000 \\\hline \end{array}\begin{array}{l|}\hline 2013\\\hline\\\hline 28,000 \\\hline 50,000 \\\hline 156,000 \\\hline 8,000 \\\hline 60,000 \\\hline(10,000) \\\hline 292,000 \\\hline \\\hline 18,000 \\\hline 120,000 \\\hline 120,000 \\\hline 34,000 \\\hline 292,000 \\\hline \end{array}\end{array}$ Diaz reported net income for 2014 Year 2 of $40,000.No property,plant,& equipment was disposed of during the year.Diaz uses the indirect method to prepare the statement of cash flows.

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Definitions:

Diseconomies of Scale

Diseconomies of scale occur when a firm or business grows so large that the costs per unit increase, leading to inefficiency and higher production costs.

Total Revenue

The entire sum of funds a business gains from selling products or offering services over a specified timeframe.

Total Cost

The complete amount of money spent by a business to produce a specific quantity of goods or services, including both fixed and variable costs.

Short Run

A period in economics during which at least one factor of production is fixed, affecting production capabilities.