An effective and stable financial system supports economic growth by facilitating borrowing and investment, mobilizing savings, managing risks, and financing technological advancements.
The effectiveness and stability of a country's financial system are essential to economic growth for several reasons:
Facilitating Borrowing and Investment: A healthy financial system allows households, firms, and the government to borrow money for various purposes. This enables households to make investments in education, housing, and consumer goods, stimulating demand and contributing to economic growth. Firms can access funding to expand their operations, invest in new technologies, hire employees, and innovate. The government relies on borrowing to finance infrastructure projects and public services. An efficient financial system ensures the smooth flow of funds between borrowers and lenders, enabling productive investments that drive economic growth.
Mobilizing Savings: A robust financial system encourages individuals and businesses to save and invest their surplus funds. Savings serve as a crucial source of capital for investment and economic development. Financial institutions gather savings from depositors and channel them towards productive activities such as business loans, mortgages, and infrastructure projects. By efficiently mobilizing savings and allocating them to productive investments, the financial system helps fund economic expansion and long-term growth.
Risk Management and Stability: The financial system plays a vital role in managing and mitigating risks. It provides mechanisms for risk diversification through instruments like insurance, pension funds, and investment portfolios. A stable financial system ensures the proper functioning of payment systems, reduces the risk of liquidity shortages, and safeguards against excessive volatility. When trust and confidence prevail within the financial system, it fosters stability, attracting domestic and foreign investors, stimulating economic activity, and promoting sustainable growth.
Financing Technological Advancements: Access to financing is crucial for firms to develop and adopt new technologies. Technological advancements enhance productivity, efficiency, and competitiveness, driving economic growth. A well-functioning financial system facilitates access to capital for research and development (R&D), innovation, and technology adoption. It supports entrepreneurs and startups by providing venture capital and angel investments, which fuel innovation and promote the growth of new industries.
In summary, an effective and stable financial system supports economic growth by facilitating borrowing and investment, mobilizing savings, managing risks, and financing technological advancements. It enables households, firms, and the government to access capital, allocate resources efficiently, and foster productive investments that contribute to sustainable economic development.
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what is integrity
A.the attitude that you are better than others
B.The belief in your own ability to do well
C.The ability to come up with new plans or ideas
D.The practice of using ethical behavior
Answer:
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What is integrity\(\color{Blue}\huge\boxed{Answer} \)
C.The ability to come up with new plans or ideasWhich types of banks are you most likely to find in local neighborhoods of a town?
Banks like Chase, PNC, and Bank of America are typical examples of retail banks; however, in some cases, these companies also provide commercial banking.
What is the various banking services are there?Numerous services are offered by some banks. A bank might, for instance, provide personal accounts to customers, merchant accounts to businesses, and even assist big businesses in raising capital on the financial markets. The banks you probably know the best are retail banks.
State Bank of India, Corporation Bank, Bank of Baroda, Dena Bank, and other institutions are examples of public sector banks. In the case of private sector banks, private individuals hold the majority of the bank's share capital. These banks are listed as limited liability companies.
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A social media threat can be anything that compromises the safety of an account. Report on any FIVE (5) security threats/risks affecting social media platforms to management at ABC Solutions.The POPI Act sets out the minimum standards regarding accessing and 'processing' of any personal information belonging to another. Management at ABC Solutions has requested you to elaborate to staff the following:Discuss any THREE (3) reasons why the POPI Act is good or works as a South African law for privacy. (15 marks)Discuss any FIVE (5) steps an organisation such as ABC Solutions can follow to become POPI Compliant. (10 marks)A privacy policy is very important because it’s an organisation's promise to the people whose personal information it processes (like customers) as to what the company is going to do with their data. Creating a privacy policy helps an organisation comply with privacy laws and avoid privacy related fines and lawsuits. Trying to create one fast and cheap can result in non-compliance, defeating the purpose of a Privacy Policy in the first place. Discuss any FIVE (5) risks to consider when using a Privacy Policy template for a company such as ABC Solutions
Three reasons why the POPI Act is good or works as a South African law for privacy are: it promotes transparency and accountability in handling personal information, it empowers individuals with rights and control over their data, and it establishes consequences for non-compliance.
The POPI Act, as a South African law for privacy, has several advantages. Firstly, it promotes transparency and accountability by requiring organizations to inform individuals about the collection and processing of their personal information. Secondly, it empowers individuals by granting them rights such as the right to access, correct, and delete their data. This gives individuals control over their personal information.
Lastly, the POPI Act establishes consequences for non-compliance, including fines and potential legal action, which encourages organizations to take privacy seriously and adhere to the law.
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During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.:
Using Department
Supplying department Administration Factory support Fabrication Assembly Finishing
Administration — 0.40 0.30 0.20 0.10 Factory support 0.10 — 0.20 0.15 0.55 Direct cost $ 480,000 $ 1,250,000 $ 1,560,000 $ 268,000 $ 238,000 Required:
Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and Finishing after this allocation. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)
The total costs of Fabrication, Assembly, and Finishing after the allocation using the reciprocal method are $2,387,500, $580,750, and $347,188, respectively.
To allocate the service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, we need to follow the below steps:
Step 1: Calculate the total costs incurred by each department by adding their direct costs to the costs incurred by the supplying departments.
Using Department
Supplying department Administration Factory support Fabrication Assembly Finishing
Administration — 0.40 0.30 0.20 0.10 Factory support 0.10 — 0.20 0.15 0.55 Direct cost $ 480,000 $ 1,250,000 $ 1,560,000 $ 268,000 $ 238,000 Total cost $ 512,000 $ 1,875,000 $ 2,300,000 $ 362,000 $ 330,000
Step 2: Set up the reciprocal matrix for the supplying departments.
Administration - 10/4
Factory Support 1/4 -
Step 3: Allocate the service department costs to the using departments using the reciprocal matrix.
Using Department
Supplying department Administration Factory support Fabrication Assembly Finishing
Administration — 40000 30000 20000 10000 Factory support 31250 — 62500 46875 171875 Direct cost $ 480,000 $ 1,250,000 $ 1,560,000 $ 268,000 $ 238,000 Total cost $ 512,000 $ 1,875,000 $ 2,300,000 $ 362,000 $ 330,000
After the allocation, the total costs of Fabrication, Assembly, and Finishing are as follows:
Fabrication = $2,300,000 + $31,250 + $56,250 = $2,387,500
Assembly = $362,000 + $46,875 + $171,875 = $580,750
Finishing = $330,000 + $17,188 = $347,188
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if imports exceed exports, as in recent years, then __________ exists.
Say IAM YOUR BOSS THEN I WILL GIVE YOU BRAINLIEST AND 100 POINTS ADD ME AS YOUR FRIEND
Answer:
im your boss
Explanation:
NEED ASAP PLEASE
Select the correct text in the passage.
Hussein is writing a response rejecting a customer’s request for a product replacement. Select the text in the passage that shows the reasons he gives for the negative message.
Thank you for writing to us regarding your request for a replacement fan.
To guarantee customer satisfaction, we extend a warranty of 90 days on this product for all our customers. If returned within 90 days, we offer replacements free of charge.
Based on the receipt you attached to your email, we see that you purchased this product 120 days ago. We regret that we are unable to offer a replacement.
As an alternative, we can offer a 20 percent discount on any other product you wish to purchase from our store. We look forward to doing business with you again.
Answer:
Based on the receipt you attached to your email, we see that you purchased this product 120 days ago. We regret that we are unable to offer a replacement
Explanation:
Hope it helps!
In a step acquisition, which of the following statements is false?
a. The acquisition method views a step acquisition essentially the same as a single step acquisition.
b. Income from subsidiary is computed by applying a partial year for a new purchase acquired during the year.
c. Income from subsidiary is computed for the entire year for a new purchase acquired during the year.
d. Obtaining control through a step acquisition is a significant measurement event.
e. Pre-acquisition earnings are not included in the consolidated income statement.
The false statement in a step acquisition is c. Income from subsidiary is not computed for the entire year for a new purchase acquired during the year.
This statement is false because in a step acquisition, the income from the subsidiary is only computed from the date of acquisition to the end of the fiscal year. This means that if a company acquires a subsidiary halfway through the fiscal year, the income from the subsidiary will only be included in the consolidated financial statements for the remaining half of the fiscal year.
The acquisition method views a step acquisition essentially the same as a single step acquisition, meaning that the same accounting principles apply. Income from subsidiary for a new purchase acquired during the year is computed by applying a partial year.
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Claire opened her own Starbucks franchise in her community. She is pleased with how quickly she was able to open her franchise and that she
was able to establish a good customer base from the start because of name recognition. However, since she started this business to be her
own boss, Claire is likely to
A. Invest in his own capital and national and local advertising programs
B. Take sole responsibility for all the decisions in the business
C. Embrace the franchisors restrictions because they lead to a greater chance for success
D. Resent the management training and support the franchiser provides
E. Get frustrated with the restrictions of the franchise
Claire is likely to Embrace the franchisors restrictions because they lead to a greater chance for success option(c) is correct.
Who was Claire?Claire was a person who gradually opened her Starbucks actually in her community she established a good customer base merely of her name in that organization.
As she is her own boss she accordingly embraces the franchisors restrictions which actually lead for more and more success of her.
Therefore Option(c) is correct.
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A negative balance in the current account means that
a trade deficit definitely exists.
a trade surplus definitely exists.
the total amount of goods, services, and transfer payments flowing out of the economy is more than the total amount flowing in.
more is being spent on domestic goods than foreign goods.
the capital account is negative.
A positive current account indicates that the nation is a net exporter of goods and services, whereas a negative current account indicates that the country is a net importer of goods and services.
What is negative balance in the current account?
Whether positive or negative, a country's current account balance will be equal to but the opposite of its capital account balance. The current account (CA) and the capital and financial account are the two components that make up the BOP. A transaction is recorded in the capital and financial account if it generates an obligation, such as selling a bond to another nation. Yet, if a transaction doesn't result in a liability (such as the expensive red automobiles), it is recorded in the current account.
Each occurrence in one account is balanced out by the opposing occurrence in the other account. For instance, the capital and financial account must fall by $100$100dollar sign, 100 if the current account grows by $100$100dollar sign, 100. The mathematical identity is established because an entry in the current account is cancelled out by an entry in the capital and finance account.
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convert the following temperature to Celsius scale (a) 450 k, (b) 273 k, (c) 73 k.
Answer: See explanation
Explanation:
To convert to Celcius scale from Kelvin, the formula to use is:
Temperature in Celcius = Temperature in Kelvin - 273
a. 450k
Temperature in Celcius = Temperature in Kelvin - 273
= 450 - 273
= 177°Celcius
(b) 273 k
Temperature in Celcius = Temperature in Kelvin - 273
= 273 - 273
= 0°C
(c) 73 k
Temperature in Celcius = Temperature in Kelvin - 273
= 73 - 273
= -200°C
How do economic growth, full employment, price stability, and inflation indicate a nation’s economic health?
Answer:
Kindly check explanation
Explanation:
The state of a nation's economy is usually evaluatwd based on certain metrics which relating to the well being of its citizens, behavior of its market, finances and resources. Those metrics may include ; level or rate of inflation, employment level, level of economic growth or decline and many others. A healthy economy is one In which economic factors are in a positive state and hence its positive effects is left by the citizens in ways including the increased level of production which economically fights inflation and also helps achieve stability in terms of prices of products and commodities. Reduction in level of unemployment and increased full time jobs. Generally, a healthy nation should experience a robust economic growth and improvement.
suppose disposable income increases by $2,000 . as a result, consumption increases by $1,500 . answer the questions based on this information. where appropriate, enter your answer as a decimal rather than as a percentage. the increase in savings resulting directly from this change in income is:________
This change in income has a direct $500 impact on savings. The MPS is 0.25 while the MPC is 0.75.
What occurs when disposable income rises?Together, rising disposable income gives households more money to either save or spend, which inevitably fuels rising consumption. One of the key factors affecting demand is consumer spending; it generates the demand that enables businesses to remain successful and add new employees.
What happens when disposable income increases?When disposable income rises, consumption increases and saving rates decline. The marginal propensity to consume is calculated by dividing the change in consumption by the change in income.
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if westerville’s chief executive officer will earn a bonus only if her roi from this year exceeds her roi from last year, would she pursue the investment opportunity?
She would pursue the investment because it increases her residual income. She would not pursue the opportunity because it would reduce her residual income.
Investment is the commitment of money to the purchase of an asset with the goal of increasing its value over time. The sacrifice of a current asset, such as time, money, or effort, is necessary for investment. To generate a return on the invested asset is the aim of financial investment.
A good way to put your money to work and possibly increase your wealth is to invest. Your money may experience value growth and outperform inflation if you invest wisely.
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If your nominal wage rises from $10 to $12 while the CPI rises from 150 to 180 will your real wage increase, decrease, or stay the same?
A. Stay the same B. Decrease C.
Increase
Answer:
A. Stay the same
Explanation:
We need to compare the rate of price change and the rate of inflation.
Rate of price change = $12 - $10 x 100
$10
=2/10 x 100
=0.2 x 100
=20%
inflation rate= CPI year 2- CPI year 1 x 100 %
CPI year 1
=180 -150 x 100
150
=30/150 x 100
=0.2 x 100
=20%
The price change are the inflation rate are the same.The real wages will stay the same
Tina shopped for office stationery online. She browsed a few music playlists of another website in a separate browser. She had a high-speed Internet connection. So, she could complete the stationery purchase quickly. At the checkout page, she entered her credit card details. She also entered the delivery address. She then checked her mail for any new emails. Which data from the online shopping portal will typically be stored in a data warehouse?
The Behavior data from the online shopping portal will typically be stored in a data warehouse.
What is Go.gle Analytics?This is known to be a Website that is said to give or provide web analytics service and it is one that tracks and reports website traffic or behavior.
Note therefore, through the use of Go.ogle Analytics, The Behavior data from the online shopping portal will typically be stored in a data warehouse.
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Answer:
1. Credit card details 2. Delivery address
Explanation:
a report containing information used to calculate taxes owed by the taxpayer is called what?
Answer:A tax return is a form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes.
Explanation:
Which of the following affects employers’ decisions on how much to pay their workers? Maximizing costs
Maximizing profits
Minimizing profits
Minimizing benefits
What affects employers’ decisions on how much to pay their workers is : Maximizing profits.
What is profit maximization?Profit maximization can be defined as the way in which a company or an organization tend to determine the price level that enables them to maximize profit.
Every company or organization goals is to make profit based on this company that is determine to make profit must tend to make use of profit maximization approach.
Profit maximization is important as it can tend to lead to sustainable growth for companies which is why most companies make use of profit maximization strategy so as to make higher profit.
Therefore what affects employers’ decisions on how much to pay their workers is : Maximizing profits.
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farms reported a pretax operating loss of $180 million for financial reporting purposes in 2024. contributing to the loss were (a) a penalty of $8 million assessed by the environmental protection agency for violationfore of a federal law and paid in 2024 and (b) an estimated loss of $10 million from accruing a loss contingency. the loss will be tax deductible when paid in 2025.
The enacted tax rate is 25%. There were no temporary differences at the beginning of the year and none originating in 2024 other than those described above.
Required:
1. Prepare the journal entry to recognize the income tax benefit of the net operating loss in 2024
2. What is the net operating loss reported in 2021 income statement?
3. Prepare the journal entry to record income taxes in 2025 assuming pretax accounting income is $205 million. No additional temporary differences originate in 2025
Journal entries for income tax benefits will be debit Income tax and credit deferred tax assets. The net operating loss cannot be determined.
1. Journal entry to recognize income tax benefit of the net operating loss in 2024:
Particulars Debit Credit
Income Tax Benefit 45,000,000
To Deferred Tax Asset 45,000,000
To recognize the deferred tax asset in the balance sheet for the future tax benefit of the operating loss, the above journal entry is necessary.
2. Net operating loss reported in 2021 income statement:
There is no information about the net operating loss reported in the 2021 income statement, so it cannot be determined.
3. Journal entry to record income taxes in 2025 assuming pretax accounting income is $205 million:
Particulars Debit Credit
Income Tax Expense 51,250,000
To Deferred Tax Asset 6,250,000
To Income Tax Payable 45,000,000
Note that the deferred tax asset of $6.25 million represents the tax benefit of the loss contingency accrued in 2024, which will be deductible for tax purposes in 2025.
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A(n) __________ is a set of guidelines for a business to follow when recruiting prospective employees.
Answer:
recruitment policy
Explanation:
A recruitment policy is a statement on how you hire. It outlines your company's preferred hiring practices and promotes consistency within your employee recruiting process
A recruitment policy is a set of guidelines for a business to follow when recruiting prospective employees. As per these guidelines the recruitment process in an organization is carried out.
What are recruitment policies ?An essential component of human resource management is the hiring process (HRM). Without careful strategic planning, it cannot be completed. The definition of recruitment is a procedure that creates a pool of qualified job candidates for the business to select from.
Companies must execute proper staffing strategies and forecasting to ascertain the number of employees they will require before hiring. The organization's annual budget as well as its short- to long-term intentions, such as potential expansion, will serve as the foundation for the forecast.
The organizational life cycle will also be a consideration. The guidelines regarding all the interaction with the clients and new joiners. Those guidelines are called as standard recruitment policies.
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You plan to operate a basketball camp during the summer at Duke University. The total number of participants is 200. Camp participants will stay three nights in the university dormitories, and each room will house two camp participants. Duke charges you $40 per room each night. Liability insurance to run the camp will cost $3,000. Meals for the three day camp will cost $6,000. Duke will not charge you for the use of the basketball facility. Nike will provide sporting goods to be used by, and given to, participants. You and your partner each want to make $8,000 profit from running the camp. How much will you have to charge each participant to meet your goal?
Answer:
$245 per participant
Explanation:
total number of participants = 200
total costs for 200 participants:
$40 per night x 3 nights x 200 = $24,000 for rooms$3,000 for insurance$6,000 for mealstotal costs = $33,000
if you want to earn $16,000 in profits ($8,000 each),
price per participant = ($33,000 + $16,000) / 200 = $49,000 / 200 = $245
kiera, an entrepreneur, borrows money from a large bank to acquire energy solutions, a small oil and gas company. she promises to repay the bank using the assets of energy solutions as collateral. in this scenario, kiera is involved in a
A firm that offers consumers products or services and is classified as nonprofit or not-for-profit does not have profit as its main objective.
What is a profit?Profit in economics is the difference between the revenue generated by an economic entity's outputs and the sum of its input costs. It is equivalent to total income less total expenses, which includes both direct and indirect expenses.
It's distinct from accounting profit, which only pertains to the costs that are explicitly stated on a company's financial accounts. Accounting profit is calculated by subtracting the company's entire revenue from its explicit costs.
When examining a corporation, an economist takes into account all costs, both apparent and implicit. Economic profit is therefore less than accounting profit.
Normal profit, economic profit, and accounting profit are all terms that relate to the profits that a corporation reports on its financial statements on a period-by-period basis.
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What is missing from this goal that is preventing it from being a SMART goal?
Goal: I want to be successful right after high school by getting a job.
This goal is NOT
O Specific
0 Measurable
O Attainable
O Relevant
O Timely
To examine
the weekly payroll of all employees, one would look at the:
To examine the weekly payroll of all employees, one would look at the: d. payroll register.
What is the payroll register?The payroll register is a book or record that is used to fill in the details of all the employees and their payment logs. A record of this register is often kept in good condition in case of any future discrepancies that will have to be resolved.
A person who wants to examine the weekly payroll of all employees in an organization must be able to look at the payroll register to know what is obtainable. There, he would find the names of the employees, their job roles and payment record.
Options:
a. W-4
b. employee earnings record
c. W-2
d. payroll register.
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this leads to widespread complaints that the banks are "zombie" banks sitting on large amounts of money rather than lending it out.
The term "zombie" banks refers to banks that hold a significant amount of money without actively lending it out. This situation can lead to widespread complaints from various stakeholders.
One reason for these complaints is that when banks hold onto large amounts of money without lending it out, it can negatively impact the economy. The money that banks have is not being put to productive use, such as providing loans to businesses or individuals who need it. This lack of lending can slow down economic growth and hinder investment opportunities.
Another concern is that when banks are labeled as "zombie" banks, it can reflect poorly on their financial health and stability. If a bank is not actively lending, it may indicate that they are struggling with their own financial issues or have a lack of confidence in the market. This can erode trust in the banking system and lead to instability in the financial sector.
To illustrate this concept, let's consider a hypothetical situation. Imagine there is a bank that has a large amount of money but is not lending it out to individuals or businesses. As a result, entrepreneurs who want to start new businesses are unable to secure the necessary funds, and existing businesses may struggle to expand or meet their financial obligations. This lack of lending can hinder economic growth and contribute to the perception of the bank as a "zombie" bank.
In conclusion, when banks hold onto large amounts of money without actively lending it out, they may be referred to as "zombie" banks. This can lead to widespread complaints due to the negative impact on the economy and concerns about the bank's financial health.
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QUESTION 1/10
Which of the following is the BEST reason to use cash for making purchases?
A. Knowing what you have spent your money on is simple.
C. Keeping track of how much you have spent is simple.
B. Splitting bills with friends is easier.
D. Getting more cash from an ATM machine is easy to do.
Answer:
A Knowing what you spent your money on is simple
5. A target market is a specific group of consumers toward whom a firm directs its marketing effort.
A target market is a specific group of consumers that a firm has identified as the most likely to be interested in its product or service. It is important for companies to understand their target market because it allows them to tailor their marketing efforts and messaging to appeal directly to their audience.
This results in more effective marketing campaigns, as well as a better return on investment.
In order to identify their target market, companies need to conduct research to understand the needs, wants, and behaviors of their potential customers. This can involve analyzing demographic data such as age, gender, and income level, as well as psychographic data such as lifestyle, values, and interests.
Once a target market has been identified, a company can then develop marketing strategies that are tailored to that specific group. For example, a company that sells high-end fashion items may target affluent consumers who value luxury and exclusivity, while a company that sells eco-friendly cleaning products may target environmentally-conscious consumers who prioritize sustainability.
Overall, understanding and targeting a specific market is essential for any successful marketing campaign. By tailoring their efforts to a specific group of consumers, companies can increase their chances of reaching and engaging with their target audience, ultimately leading to increased sales and brand loyalty.
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After graduation, you plan to work for Donald's Fashion Co. For seven years and then start your own business. You expect to save and deposit $10,000 a year for the first three years (t=1 through t=3) and $14,000 annually for the four years after (t=4 through t=7). The deposits are made at the end of each year, with the first deposit being made a year from today. In addition, your grandfather just gave you a $40,000 graduation gift which you will deposit immediately (i.E. T=0). If the account earns 8% compounded annually, how much will you have saved when you start your business seven years from now?
Answer:
The amount that will you have saved when you start your business seven years from now is $175,805
Explanation:
In order to calculate the amount that will you have saved when you start your business seven years from now we would have to calculate the Future Value from the deposit since the year 0 to year 7 as follows:
Future value of year 0 with deposit of $40,000 and rate 8%=PV(1+r)∧t
Future value of year 0 with deposit of $40,000 and rate 8%=$68,552.97
Future value of year 1 with deposit of $10,000 and rate 8%=$15,868.74
Future value of year 2 with deposit of $10,000 and rate 8%=$14,693.28
Future value of year 3 with deposit of $10,000 and rate 8%=$13,604.89
Future value of year 4 with deposit of $14,000 and rate 8%=$17,635.97
Future value of year 5 with deposit of $14,000 and rate 8%=$16,329.60
Future value of year 6 with deposit of $14,000 and rate 8%=$15,120.00
Future value of year 7 with deposit of $14,000 and rate 8%=$14,000.00
Therefore, amount that will you have saved=$68,552.97 + $15,868.74 + $14,693.28+$13,604.89+$17,635.97+$16,329.60+$15,120.00+$14,000.00
amount that will you have saved=$175,805
The amount that will you have saved when you start your business seven years from now is $175,805
college students from idaho elected to spend their spring break in lake tahoe, ca rather than in cancun, mexico because california is closer and the transportation is cheaper. this decision illustrates the concept of:
The decision illustrates the concept of Intervening opportunity
The concept of intervening opportunity refers to the idea that the availability and attractiveness of alternative options can influence a person's decision-making. An opportunity arising in between a person's starting point and the place they want to go while they are migrating. It is regarded as a pull factor that encourages migration to other locations. It is described as settling in a location that is less distant.
For instance, if a person wanted to travel somewhere but stopped in the middle and waited for a bit before moving on to the destination. In the given case, the college students from Idaho chose to go to Lake Tahoe instead of Cancun because it was closer and more affordable, suggesting that the intervening opportunity of a nearby and less expensive destination influenced their decision.
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Diamond Construction is an owner-managed entity with contracting revenues of $20 million in 2023. As
construction is a labour-intensive industry, one of Diamond's largest expense accounts is labour and wages. You
are a first-year auditor at Klein and Partners. You have been given the following information regarding the
entity's payroll process for hourly employees at Diamond Construction:
1. The owner-manager is the only person who can authorize the hiring of a new employee.
2. When a new employee is hired, the payroll clerk prepares a new employee package that includes:
• safety orientation
• tax forms
benefits plan enrolment
3. Only the payroll manager has the ability to update the employee master list. This can only be done once the
tax forms, a void cheque with direct deposit information, and the owner's approval have been received. All
forms need to be returned before the payroll manager will update the payroll master list and add any new
employees.
4. Hourly employees are paid biweekly.
5. Hours worked are tracked on time cards. Supervisors fill in the time cards for each individual day and
initial each of the time cards, noting the hours worked.
6. At the end of the pay period, time cards are provided to the payroll clerk, who compiles the total hours
worked and codes the hours to the appropriate job number. Once compiled, the payroll clerk enters the
hours worked per person in the payroll system.
7. The accounting system prepares the direct deposit information based on the rates of pay maintained in the
payroll master list (listing of all authorized staff and approved wage rates). It also calculates the
withholding taxes.
8. This information is transferred to the bank and a record of the transmission is printed and attached to the
front of the payroll run.
9. The payroll module is integrated with the general ledger. The payroll clerk prepares and posts the journal
entry to the payroll expense accounts.
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[3:04 PM, 8/3/2022] Fariya Idrees: 4. Hourly employees are paid biweekly.
5. Hours worked are tracked on time cards. Supervisors fill in the time cards for each individual day and
initial each of the time cards, noting the hours worked.
6. At the end of the pay period, time cards are provided to the payroll clerk, who compiles the total hours
+
worked and codes the hours to the appropriate job number. Once compiled, the payroll clerk enters the
hours worked per person in the payroll system.
7. The accounting system prepares the direct deposit information based on the rates of pay maintained in the
payroll master list (listing of all authorized staff and approved wage rates). It also calculates the
withholding taxes.
8. This information is transferred to the bank and a record of the transmission is printed and attached to the
front of the payroll run.
9. The payroll module is integrated with the general ledger. The payroll clerk prepares and posts the journal
entry to the payroll expense accounts.
10. Pay stubs with payroll details are given to the supervisors for distribution.
11. If an employee is terminated, Diamond just stops paying them as they no longer have time cards submitted.
12. When an employee has been promoted or their job classification has changed, the supervisor will verbally
communicate this to the payroll manager, who will then update the payroll master file. Therefore, source
documentation in employee files will only relate to an employee's original job classification. The rationale
for this was that most job classification changes would only result in an additional dollar or two per hour
paid to the employee.
Required
a. Identify the control strengths of the payroll process at Diamond Construction. For each strength, identify
what the test of that control could be.
b. Identify the control weaknesses of the payroll process at Diamond Construction. For each weakness,
identify the implications of the weakness and recommend how to improve it.
PLEASE ANSWER PART B ASAP THANKS YOU
Control weaknesses increase the risk of payroll errors, inaccurate payments, and potential fraudulent activities. It also undermines the integrity and reliability of the payroll process, which can impact employee morale and trust in the company.
1. Lack of segregation of duties: The payroll clerk has the ability to update the employee master list, compile total hours worked, and enter hours into the payroll system. This lack of segregation of duties increases the risk of errors or fraudulent activities going undetected.
2. Manual time card tracking: Supervisors fill in the time cards for each day and initial them, noting the hours worked. This manual process is susceptible to errors or manipulation.
3. Lack of documentation for job classification changes: When an employee's job classification changes, there is no source documentation in their employee file. This lack of documentation increases the risk of errors or misunderstandings regarding pay rates
Recommendations to improve the weaknesses: Diamond Construction should implement the following measures:
1. Segregate duties: Assign different individuals to handle tasks such as updating the employee master list, compiling hours worked, and entering hours into the payroll system. Implement a review process to ensure accuracy and detect any errors or irregularities.
2. Implement automated time tracking: Replace manual time card tracking with an automated system that accurately records and tracks employee hours. This will reduce the risk of errors and fraudulent time entries.
3. Document job classification changes: Establish a formal process to document and communicate job classification changes. Maintain accurate records of changes in employee files and ensure that payroll calculations are based on the correct job classifications.
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