Franklin Company Began Business in 2008 and Has Consistently Used

question 44

True/False

Franklin Company began business in 2008 and has consistently used the cash method to report income from the sale of inventory in income tax returns filed for 2008 through 2012.As a result of an audit by the IRS, Franklin was required to change to the accrual method of accounting beginning with 2013. The net adjustment due to the change is a positive adjustment to income. The adjustment may be spread equally over 2013 and the three following years.

Comprehend the relationship between the interest-rate cost of funds and the expected rate of return.

Identify factors that can shift the expected-rate-of-return curve and their impacts on R&D investment.

Analyze the effect of R&D expenditures on a firm’s profitability.

Distinguish between the marginal cost and the marginal benefit of R&D spending.

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Definitions:

Truth-in-Lending Act

A U.S. federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.

Unauthorized Charges

Expenses made to a credit card, bank account, or other financial account without the account holder’s approval or knowledge.

Credit Card

A payment card issued by financial institutions allowing the cardholder to borrow funds for purchases or cash advances.

Strict Product Liability

A legal doctrine that makes a manufacturer, distributor, or seller of a defective product liable for the damages caused by that product, regardless of fault.