Economics Answers

Under what conditions will a firm exit a market? Explain

Show diagrammatically the impact on the firm's profit if in the short run demand or the product reduces

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1. Key Insurance Agency was organized on October 1, 2020. Assume that the accounts are closed and financial statements prepared each month. The company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition, October 1. The trial balance for Key Insurance Agency at December 31 is shown below.

Cash $22,565

Accounts Receivables 7.050

Office Equipment 9,600

Accumulated Depreciation: Office Equipment 160

Accounts Payable 2,260

Income Taxes Payable 4,965

Capital Stock 20,000

Retained Earnings 7,450

Dividends 2,500

Commissions Earned 31,080

Advertising Expense 2,400

Salaries Expense 18,000

Rent Expense 3,800

Totals $65,915 $65,915

a. Prepare the adjusting entry to record depreciation of the office equipment for the month of December, using the straight line method of computing depreciation expense.

Assume the following data extracted from accounting records of XYZ Company, a merchandising firm

Gross Purchase Br. 400,000

Sales returns and allowance 5,000

Sales discount 1,000

Purchase returns and allowance 2,000

Purchase discount 500

Gross sales 800,000

Ending inventory 40,000

Beginning inventory 50,000

Transportation in 1500

Operating expenses 150,000

Non-operating Expenses 10,000

Income Tax 30%

Required: Compute Net income (net loss) for the period

Discuss about the four finance functions (financial management decisions)

Discuss about the four basic financial statement (income statement, statement of owners’ equity, balance sheet, and statement of cash flows); comparing and contrasting their differences in merchandising firms Vs. service providing entities

The impact lag is shorter for monetary policy than for fiscal policy.

a. True

b. False

A project with a 3 year life and a cost of R95 000 generates revenues of R32 000 in year 1, R44 000 in year 2, and R52 000 in year 3. If the discount rate is 14%, what is the NPV of the project?

Explain the concept of the long run economic growth and the key idea of Solow Growth model. Also explain how the Solow growth model is appropriate to long-run growth analysis.

Show diagrammatically the impact on the firm's profit if in the short run demand or the product reduces.