A Grocery Store Manager Has $600 in Cash with Which

question 88

Multiple Choice

A grocery store manager has $600 in cash with which to buy a rug cleaner.Rental income from the cleaner would be about $75 per year.The interest rate is 11 percent.Should the manager buy the machine?

• A)Yes,since the rate of return is greater than the rate of interest.
• B)Yes,since the manager does not have to borrow the money the interest rate is irrelevant.
• C)No,since the yield of $75 is less than the interest cost of 11 percent.
• D)No,since the rate of return is less than the interest rate.
• E)Yes,since the return of $75 is greater than 11 percent.

Differentiate between available-for-sale, held-to-maturity, and held-for-trading securities and their accounting treatment.

Assess a company's financial performance through return on total assets calculation.

Explain the accounting for and reporting of equity securities having significant influence over an investee.

Understand the concept of significant influence and the criterion related to an investee's voting shares.

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Definitions:

Reduces

Makes smaller in amount, degree, or size; diminishes or lessens.

Perfectly Competitive

A market structure where many firms sell identical products, no single firm can influence the market price, and there are no barriers to entry or exit.

Standardized Product

A product that conforms to specifications that ensure it is the same in quality and design, regardless of the source of production.

Microsoft

A multinational technology company known for its software products, including the Windows operating system, Office suite, and Azure cloud services.