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What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
If merchandise inventory is being valued at cost and the price level is steadily rising the method of costing that will yield the highest net income is?
The method of costing that will yield the highest net income is FIFO. FIFO stands for first in, first out.
What method of costing will yield the largest net income if the purchase price is steadily falling?
LIFO
What is the target net income?
Target Net income = (Target Operating income)-(Target Operating income x Tax rate) Target operating income = (Revenues-Variable costs)- Fixed Costs
An accrued revenue adjustment has what effect on net income?
it will increase your income and Accounts recievable
What is variable costing method?
method in which the costs to be inventoriedinclude only the variablemanufacturing costs. Fixed factory overhead is treated as a period cost-it is deducted along with the selling and administrative expenses in the period incurred. That is, Direct materials $xx Direct labor xx Variable factory overhead xx Product cost $xx Fixed factory overhead is treated as a period expense. Variable costing is used for internal management only. Its uses include: (1) inventory valuation and income determination; (2) relevant cost analysis; (3) break-even analysis and Cost-Volume-Profit (CVP) Analysis ; and (4) short-term decision-making. Variable costing is, however, not acceptable for external reporting or income tax reporting. Companies that use variable costing for internal reporting must convert to absorption costing for external reporting. Under absorption costing, the cost to be inventoried includes all manufacturing costs, both variable and fixed. Nonmanufacturing (operating) expenses, i.e., selling and administrative expenses, are treated as period expenses and thus are charged against the current revenue. Direct materials $xx Direct labor xx Variable factory overhead xx Fixed factory overhead xx Product cost $xx Two important facts are noted: 1. Effects of the two costing methods on net income: (a) When production exceeds sales, a larger net income will be reported under absorption costing. (b) When sales exceed production, a arger net income will be reported under direct costing. (c) When sales and production are equal, net income will be the same under both methods. 2. Reconciliation of the direct and absorption costing net income figures: (a) The difference in net income can be reconciled as follows: (b) the above formula works only if the fixed overhead rate per unit does not change between the periods.
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
If merchandise inventory is being valued at cost and the price level is steadily rising the method of costing that will yield the highest net income is?
The method of costing that will yield the highest net income is FIFO. FIFO stands for first in, first out.
Would stock purchased in 1993 deemed worthless in 2007 will this effect the net income?
Yes. It will have effect on net income. What will not have effect on net income is a prior period adjustment because it only affects retained earnings.
What method of costing will yield the largest net income if the purchase price is steadily falling?
LIFO
What is the difference between a contribution approach income statement and a traditional approach income statement?
Under the contribution approach (variable costing), all variable expenses (both manufacturing and non-manufacturing) are deducted first from sales to arrive at contribution margin. Fixed costs (both manufacturing and non manufacturing) are deducted from contribution margin to arrive at net income before taxes. Under traditional approach (absorption costing), all the manufacturing costs (both fixed and variable) are deducted from sales to arrive at gross profit (margin). Non-manufacturing (Selling and administrative) costs are then deducted from gross margin to arrive at net income before taxes.
What effect does depreciation expense have on net income and cash flow?
Depreciation Expense reduces net income and has no effect on cash flow.
What is the target net income?
Target Net income = (Target Operating income)-(Target Operating income x Tax rate) Target operating income = (Revenues-Variable costs)- Fixed Costs
What is targets net income?
Target Net income = (Target Operating income)-(Target Operating income x Tax rate) Target operating income = (Revenues-Variable costs)- Fixed Costs
What is net recurring in income statements?
Law of effect
An accrued revenue adjustment has what effect on net income?
it will increase your income and Accounts recievable
If you sold 3000 units at 500 each variable expense were 350 per unit and fixed expenses were 200000 what is the net income?
Sales = 1500000 Less. variable cost = 1050000 Less: fixed cost = 200000 Net income = 250000
