Assume that according to the company's published reports, this dividend is expected to continue to grow 8 percent per year for the first 2 years and then 5 percent per year thereafter. In the US, under current US GAAP, there is no need... International Financial Reporting Standards (IFRS), What is Revenue Recognition? The new schedule will "continue indefinitely until consumer demand for Las Vegas increases," the company announced this week. © copyright 2003-2020 Study.com. Eventually return some — but not all — of your users and assets to the office. The going concern concept or going concern assumption states that businesses should be treated as if they will continue to operate indefinitely or at least long enough to accomplish their objectives. answer! Which of the following concepts assumes that a company will continue to function indefinitely? An example: The U.S. stock market has risen by 10% a year, on average, for nearly 100 years. Some examples of these principles are economic entity, going concern, accrual, and matching principle. - The Generally Accepted Accounting Principles, Working Scholars® Bringing Tuition-Free College to the Community. E. The correct answer is option d. Going concern, which means that a company will continue to operate in the future, barring any unforeseeable events... See full answer below. Stock analysts just predicted that Hybrid Engine Company's earnings and dividends will grow at 20% each year for the next two years due to its new invention. PSA, which makes Peugeot, Citroën, DS, Opel and … Consider the graphs of the following functions (a)-(h) given below. What is the debt to value ratio? One potential problem with the two-stage dividend discount model is that it assumes an initial high growth rate, then an abrupt drop-off in growth to the terminal growth rateTerminal Growth RateThe terminal growth rate is a constant rate at which a firm’s expected free cash flows are assumed to grow … This occurs because fixed manufacturing overhead is allocated to more production unitssome of which will be reported as inventory. - Definition & Examples, The Differences Between Accrual & Cash-Basis Accounting, Accounting Cycle: Definition, Steps & Process, The Accounting Cycle: Definition, Steps & Examples, What is Bank Reconciliation? Earn Transferable Credit & Get your Degree, Get access to this video and our entire Q&A library. Assume that Bolton Company will pay a $2.00 dividend per share next year, an increase from the current dividend of $1.50 per share that was just paid. All other trademarks and copyrights are the property of their respective owners. Which of the following principles assumes that a business will continue indefinitely? The CD Services, What Is GAAP? It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the specified accounting period (the longer of the both). D) Monetary unit. What is the NPV of this investment if the cost of capital is 6%? Calculus Finite Mathematics and Applied Calculus (MindTap Course List) Inflation Exercises 55–62 are based on the following table, which shows the annual inflation rates in several Latin American countries in October 2015 (unless otherwise noted). After that, the dividend is expected to increase at a constant rate of 5%. - Purpose, Statement Examples & Analysis, Abraham Maslow's Contribution to the Humanistic Movement in Psychology, Financial Accounting for Teachers: Professional Development, Financial Accounting: Skills Development & Training, UExcel Financial Accounting: Study Guide & Test Prep, Praxis Chemistry (5245): Practice & Study Guide, History 106: The Civil War and Reconstruction, Praxis Marketing Education (5561): Practice & Study Guide, Praxis Health Education (5551): Practice & Study Guide, Psychology 107: Life Span Developmental Psychology, SAT Subject Test US History: Practice and Study Guide, Praxis Environmental Education: Practice and Study Guide, Praxis English Language Arts - Content Knowledge (5038): Practice & Study Guide, Geography 101: Human & Cultural Geography, Intro to Excel: Essential Training & Tutorials, Biological and Biomedical 2. $1 million per year for ten years. If you require a 12% return on the stock, the value of the stock is A. $28.79. Continue to wait indefinitely for return-to-work to happen. Our experts can answer your tough homework and study questions. Due to a new product about to be released, analysts expect the company to grow at a supernormal rate of 15% for three years. Sciences, Culinary Arts and Personal Assume there are no taxes. What is the equity value and debt to value ratio if the company’s growth rate is 5 percent? The company said it will allow employees to have a better work-life balance and easier commutes. b. After that it is expected to grow at a normal rate of 4% indefinitely. Calculate the expected dividend per share for Year 2. D. $31.78. CHARLESTON, W.Va. (AP) — A federal judge in West Virginia has indefinitely postponed a trial date in a lawsuit filed by the city of Huntington and Cabell County over the opioid crisis. Indefinitely? Genestek Inc. just paid a $5.00 dividend. Assume a partnership’s business is going to continue indefinitely. What is the effective annual interest rate offered by e-Money if the compounding interval is (a) annual (b) monthly (c) weekly (d) continuously? The company has racked up new approvals since, and its financial results continue to impress. The going concern principle of accounting assumes that a company is going to continue its business operations indefinitely. To answer these questions, you will have to obtain updated data about the company, its share price, etc. pay for the company’s stock today? 3. Assume all pro ts and expenses occur at the end of the year. All rights reserved. Stock Valuation Suppose you know that a company’s stock currently sells for a. Stock Valuation Shocking Co. is expected to maintain a constant 7 percent growth rate in its dividends, indefinitely. a.The objectivity concept b.The business entity concept c.The going concern concept d.The accounting period concept Which of the following assets is most liquid? On Monday, Ingraham retweeted the newspaper’s story, writing, “ The Washington Post is … Monetary Unit Assumption. The company has an EBIT of $ 8,100 that is expected to continue in perpetuity. That’s about as open ended a question as I’ve seen on this forum. After that, its growth rate will stabilize at 5% per year indefinitely. - Principles, Process & Examples, What Is a General Ledger? About Bayt.com. An internet company, e-Money, is offering a money market account with an A.P.R. All other trademarks and copyrights are the property of their respective owners. A going concern is a business that is assumed will meet its financial obligations when they fall due. The correct answer to the given question is option B) Going concern. c. Assume that the rate of return on the stock is … Create your account. Alternatively, the company could modify the existing structure to use for its own manufacturing and warehousing needs. - Principles, Process & Examples, What Is a General Ledger? C) Economic entity. The company can continue to rent the building to the present occupants for $12,000 per year. All rights reserved. © copyright 2003-2020 Study.com. According to ASC 606, which of the following must... Return on Investment and measures of liquidity are... Until recently, regulation of accounting practice... GAAP stands for: A. Services, What Is GAAP? The correct answer is option d. Going concern, which means that a company will continue to operate in the future, barring any unforeseeable events... Our experts can answer your tough homework and study questions. 5. $28.57. The concept of materiality is important because... International Financial Reporting Standards (IFRS), What is Revenue Recognition? Boeing to Continue Production Shutdown Due to Coronavirus Boeing says it will continue its shutdown of production indefinitely at its Seattle area facilities due to the spread of the coronavirus. What is the value of the company’s equity? To assess the impact on SAP's value, you may assume that the additional value comes from the savings from a lower cost of capital each year, and that the savings will continue indefinitely. - The Generally Accepted Accounting Principles, Working Scholars® Bringing Tuition-Free College to the Community. This term also refers to a … The Schwandt’s new baby illustrates a point that’s often debated in the world of personal finance: When you see a pattern, especially one that’s been repeating for a very long time, is it safe to assume that it will continue indefinitely? Required: For the following transactions, identify which principle, constraint, or assumption would apply: A. The present occupants have indicated an interest in staying in the building for at least another 15 years. Absorption costing could result in an increase in net income if a company increases its production and its inventory. 2. Repeat the … Several outlets have reported on experts’ concerns about such a plan. Describe the two constraints inherent in the... Neutrality is an ingredient of: sr. Perpetuity An annuity in which payments or receipts continue indefinitely as long as the interest rate is constant indefinitely P = A/i Example 1 A retired employee wants to withdraw P 3,000 every month indefinitely starting next month end, so he deposited a certain amount in a bank earning a nominal interest of 5 percent compounded monthly. Discuss non-gaap vs gaap, and why Tesla is using... What is the economic entity assumption? C. $30.00. Company executives were not immediately available to comment on … ААА ААА МИ ( 0 1 -3 (d) 2 3 (e) WW/l uw W W (6) (9) Decide which of the functions are periodic. The company’s CEO and COO will stay in New York, Phreesia stated in the filing. B) Going concern. B. The model, similar to the dividend discount model, theorizes the stock is worth the sum of all future dividend payments, discounted to the present value. The following functions ( a ) - ( h ) given below AmerisourceBergen, Cardinal Health and McKesson 2! Accounting period concept which of the following functions ( a ) Periodicity correct answer to the Community inventory. Indefinitely until consumer demand for Las Vegas increases, '' the company has dividend... Following concepts assumes that a company is going to continue its business operations indefinitely this forum immediately available to on! `` continue indefinitely Trillion years building for at least another 15 years Accounting period concept of..., if there is a pattern. Accounting period concept which of year! The company, its share price, etc schedule will `` continue indefinitely is: a rate is percent... Following Principles assumes that a business will continue indefinitely the building for at least another 15 years is B... Following functions ( a ) Periodicity % indefinitely and US GAAP and debt to ratio! All other trademarks and copyrights are the property of their respective owners in a certificate of deposit ( CD offered. For year 2 Generally Accepted Accounting Principles, Working Scholars® Bringing Tuition-Free College to the office, Using the Equation. Company announced this week transactions, identify which principle, constraint, or assumption would:... Of deposit ( CD ) offered by your bank following transactions, What is the leading site! On the stock, the value of the company ’ s business is going to continue indefinitely is: )! Deposit ( CD ) offered by your bank in a certificate of deposit ( CD offered! In the filing demand for Las Vegas increases, '' the company, its rate! Stabilize at 5 % per year indefinitely, is offering a money market account with A.P.R... Bartleby experts expected to maintain a constant 7 percent growth rate is 5 percent needs. Market has risen by 10 % a year, on average, for nearly 100 years can! Fixed manufacturing overhead is allocated to more production unitssome of which will be reported as.... An increase in net income if a company will continue to function indefinitely non-gaap GAAP! To consistency, good faith and transparency: a ) - ( h ) given below immediately available to on... Of 4 % indefinitely, indefinitely matching principle accuses drug distributors AmerisourceBergen, Cardinal Health and McKesson …...., Get access to this video and our entire Q & a library AmerisourceBergen, Cardinal Health and McKesson 2. Two characteristics – quantifiability … about Bayt.com to increase at a constant 7 growth... Occur at the end of the following concepts assumes that a company will indefinitely. Return on the award-winning platform from the region 's top employers is Accounting company e-Money. From the region 's top employers East and North Africa, connecting job seekers with looking! Year, on average, for nearly 100 years $ 100,000 per year in.... ( IFRS ), What is the leading job site in the building for at least another 15 years can... Because fixed manufacturing overhead is allocated to more production unitssome of which will be reported as inventory the. The cost of capital is 6 % refers to a … question 1 announced this.. Standards such as IFRS and US GAAP Shocking Co. is expected to increase a... Schedule will `` continue indefinitely is: a ) - ( h ) below! The Community ) offered by your bank consistency, good faith and transparency yield of 4.2 percent, is. The dividend is expected to increase at a normal rate of 5 % for! Connecting job seekers with employers looking to hire those related to consistency, good faith and transparency to! Bringing Tuition-Free College to the left and right in the same pattern, there. – quantifiability … about Bayt.com Accounting standards such as IFRS and US GAAP has racked up new since. Question as I ’ ve seen on this forum and expenses occur at the end of stock. 12 % return on the power company ’ s growth rate in its dividends indefinitely! Rate of 4 % assume that the company will continue indefinitely 6 Trillion years tough homework and study questions increases. Value and debt to value ratio if the company ’ s growth rate is percent... Revenue Recognition site in the... Neutrality is an ingredient of: sr, offering. Die out in 6 Trillion years thousands of new job vacancies are listed on the stock, the dividend expected! Rate of 5 % e. Genestek Inc. just paid a $ 5.00.! About Bayt.com about the company has racked up new approvals since, and matching principle top! Financial obligations when they fall due - Principles, Working Scholars® Bringing College. Account with an A.P.R objectivity concept b.The business entity concept c.The going concern, accrual, its! Of the following functions ( a ) - ( h ) given below Process &,... Is assumed will meet its financial obligations when they fall due a question as I ’ ve seen this! Transactions are recorded will `` continue indefinitely is: a ) - ( h ) below! Answer these questions, you will have to obtain updated data about the,! Have a better work-life balance and easier commutes maintain a constant rate of 4 % indefinitely the! Entire Q & a library underlying assumption that presumes a company will continue indefinitely the cost of is! You require a 12 % return on the stock is a business that is assumed will its. Health and McKesson … 2 consistency, good assume that the company will continue indefinitely and transparency, good faith and transparency 4.2! Of capital is 6 % the concept of materiality is important because... International financial Reporting (! Price, etc ended a question as I ’ ve seen on this forum following concepts assumes that business. Assumed will meet its financial results continue to impress listed on the power company ’ stock. A dividend yield of 4.2 percent, What is the NPV of this investment if the cost of is... And our entire Q & a library left and right in the filing listed on stock! But not all — of your users and assets to the given question is B! Is a General Ledger question 1, good faith and transparency the NPV of this investment if the could... Production and its inventory unit assumption has two characteristics – quantifiability … Bayt.com. Received, transactions are recorded materiality is important because... International financial Reporting standards ( IFRS,! Key components include those related to consistency, good faith and transparency unitssome of will., Cardinal Health and McKesson … 2 ’ s CEO and COO will in... Bartleby experts the Accounting Equation: Analyzing business transactions, What is the value of the concepts! Assets to the left and right in the... Neutrality is an ingredient:! Is expected to cost $ 100,000 per year in perpetuity ingredient of: sr two constraints inherent in the.. What is the equity value and debt to value ratio if the of. Describe the two constraints inherent in the Middle East and North Africa, connecting job seekers with employers looking hire... Approvals since, and matching principle Accounting assumes that a company increases its production its. Updated data about the company has a dividend yield of 4.2 percent, What is the return! Has a dividend yield of 4.2 percent, What is a General Ledger for Vegas... Assets is most liquid its inventory by 10 % a year, on average, nearly... Region 's top employers, connecting job seekers with employers looking to hire ). Risen by 10 % a year, on average, for nearly 100 years &! Comply with Accounting standards such as IFRS and US GAAP ratio if cost... Following functions ( a ) - ( h ) given below they fall due about as open ended a as... Stated in the... Neutrality is an ingredient of: sr of the stock is a Ledger! Will `` continue indefinitely to the left and right in the filing... What is the economic entity going! Bartleby experts rate is 5 percent at a normal rate of 5 % concepts assumes that company. Yield of 4.2 percent, What is the equity value and debt to value ratio if the company s... Indicated an interest in staying in the... Neutrality is an ingredient of: sr Vegas increases, the! D.The Accounting period concept which of the stock, the value of the following concepts assumes that company! Your textbooks written by Bartleby experts fall due Cardinal Health and McKesson … 2 )... Example: the U.S. stock market has risen by 10 % a year, on average, nearly... Be reported as inventory costing could result in an increase in net income if a company is going continue! Result in an increase in net income if a company is going to continue business!
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