Answer: False
Explanation:
While Proprietorship do indeed have the tax advantage of not having to pay Corporate income tax, the same cannot be said for the ease at which they can raise capital.
In general, Proprietorships find it hard to raise capital as investors will be worried of investing into a one person run operation. They would rather prefer that their investments were protected by the law and that the company had enough experienced people on board as well which is why they would prefer a Corporation.
Even getting loans as a Proprietorship can be hard because banks will set a high rate for the business to cater for a default risk.
Answer:
The acquisition of businesses that gives the company control of supply chains is vertical integration.
Explanation:
Vertically incorporated corporations acquires either its customer's business or its supplier's business to have a control of supply chains and distribution channels.
The customer's business acquisition is often referred to as forward integration and the movement of a company to acquire its supplier's business is often referred to as backward integration.
Answer:
The NPV from opening the branch office is negative ( -$106668.08). Thus the branch office should not be opened.
Explanation:
The decision to open the branch office will be taken based on the NPV provided by opening of the branch office. If the NPV of a project is positive based on the required rate of return used as a discount rate fro cash flows, the investment is worth undertaking.
The net present value (NPV) for a project can be calculated as,
NPV = CF1 / (1+r) + CF2 / (1+r)² + ... + CFn / (1+r)^n - Initial Outlay
Where,
- r is the appropriate discount rate
- Initial Outlay is the Initial cost of the project
- CF represents cash flows from the project
As the required return is 16%, we will take this as the appropriate discount rate.
NPV = 45000 / (1+0.16) + 120000 / (1+0.16)² + 150000 / (1+0.16)³ +
150000 / (1+0.16)^4 + 150000 / (1+0.16)^5 - 485000
NPV = - $106668.08
As the NPV from project is negative at a required return of 16%, the project should not be under taken and the branch office should not be open.
Answer:
a. Journal entry to record the issue of notes
Date Account Title & Explanation Debit $ Credit $
Jan 1 Cash 350,000
Notes Payable 350,000
(To record the issue of notes payable)
b. Calculation of Interest Expenses
Particulars Amount $
Beginning balance of loan payment 350,000
Annual interest rate 4%
Interest expenses 14,000
Hence the interest expenses = $14,000
Principal amount is calculated as the difference between the annual payment and the interest expenses as seen below
Particulars Amount $
Annual payment 96,590
Less: Interest expenses 14,000
Principal Payment 82,590
Hence, the principal payment =$82,590
The recording of business transactions is a basic and fundamental component of financial reporting and is known as<u> bookkeeping.</u>
<h3>What is Bookkeeping?</h3>
Bookkeeping is the process of recording financial transactions. It entails preparing reference papers for all company transactions, activities, and other occurrences.
The primary goal of bookkeeping is to maintain a comprehensive and precise record of all operations and transactions in a methodical, ordered, and logical way. This guarantees that the financial consequences of these activities are accounted for in the accounting books.
Learn more about Bookkeeping here:
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