Answer:
The correct option is B
Explanation:
Capital gain is the term which is defined as the increase or rise in the capital asset value,that offer the higher worth than the purchase price of the asset. And the gain will not be realized until the asset is sold. It is linked with the investment which the investor earned or gained through the investment.
So, the aggregate return which the investor earn on any of the investment comprise of the dollar return plus the capital gain which is linked with the investment.
Which of the following is true of strategic plans? a. They are developed by middle- and lower-level managers b. They have a short time horizon. c. They have specific and concrete focus.
Answer:C
Explanation:
They have specific and concrete focus
A strategic plan is typically developed by top-level management, has a long-term focus, and provides a broad outline of the company's goals and how they can be achieved
Explanation:Strategic plans are typically developed by top-level executives and decision-makers in a company, so, option 'a' might not be entirely true. A strategic plan generally has a long-term perspective, usually 3 to 5 years or even more, hence, statement 'b' is not accurate. Option 'c' is also not completely accurate because a strategic plan is not typically very specific or concrete, it is often general and broad, providing a big picture outlook for the company it is planned for.
A strategic plan is a document used by businesses to outline their overall goals and the steps they plan to take to achieve these goals. The plan serves as a roadmap for the organization and helps to align the various parts of the organization. It's a critical tool for guiding the decisions and actions of the business and ensuring that everyone is on the same page.
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10. ABC Company uses a job-order costing system and computes its predetermined overhead rate annual on the basis of direct labor-hours. At the beginning of 2018, it estimated the direct-labor hours for the upcoming year to be 10,000 direct labor-hours. ABC Company also estimated $50,000 of fixed overhead and $40,000 of variable overhead for the year. The actual fixed overhead for the year was $60,000, and the actual variable overhead was $35,000. The actual labor-hours for the year turned out to be 9,000. Compute the predetermined overhead rate for 2018.
Answer:
Predetermined overhead rate is $9 per labor hour
Explanation:
Estimated Direct-labor hours = 10,000
Estimated Manufacturing overheads = Estimated Fixed overheads + Estimated variable overheads
Estimated Manufacturing overheads = $50,000 + $40,000
Estimated Manufacturing overheads = $90,000
Predetermined overhead rate = Estimated Manufacturing overheads / Estimated Direct-labor hours
Predetermined overhead rate = 90,000 / 10,000 = $9 per labor hour
Tamarisk Leasing Company signs a lease agreement on January 1, 2017, to lease electronic equipment to Carla Vista Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement:1. Carla Vista has the option to purchase the equipment for $24,500 upon termination of the lease. It is not reasonably certain that Carla Vista will exercise this option.2. The equipment has a cost of $290,000 and fair value of $319,000 to Tamarisk Leasing. The useful economic life is 2 years, with a residual value of $24,500.3. Tamarisk Leasing desires to earn a return of 5% on its investment.4. Collectibility of the payments by Tamarisk Leasing is probable.Prepare the journal entries on the books of Tamarisk Leasing to reflect the payments received under the lease and to recognize income for the years 2017 and 2018. (
Answer:
a. $46,000
see the other answers in the explanation
Explanation:
(a) Fair value of leased asset to lessor $245,000
Less: Present value of unguaranteed residual value $24,335 X .63017
(present value of 1 at 8% for 6 periods) $15,335
Amount to be recovered through lease payments $229,665
Six periodic lease payments $229,665 ÷ 4.99271 $46,000*
*Present value of an annuity due of 1 for 6 periods at 8%.
b.
(c)
1/1/17
Lease Receivable 245,000
Cost of Goods Sold 229,665
Sales Revenue 229,665
Inventory 245,000
1/1/17
Cash 46,000
Lease Receivable 46,000
12/31/17
Lease Receivable 15,920
Interest Revenue 15,920
1/1/18
Cash 46,000
Lease Receivable 46,000
12/31/18
Lease Receivable 13,514
Interest Revenue 13,514
What theory argues that free trade is beneficial, but that differences in factor endowments, not productivity, determine the pattern of international trade? Heckscher-Ohlin Leontief Ricardo Porter-Friedman
Answer:
The correct answer is letter "A": Heckscher-Ohlin.
Explanation:
Named after Swedish economists Eli Heckscher (1879-1952) and Bertil Ohlin (1899-1979), the Heckscher–Ohlin theory states that countries should focus their efforts on producing and exporting those goods they are good at manufacturing and they should import the goods they struggle in making. The concept is based on both the productivity and non-productivity of nations and their best bequests.
According to economic historians, modern economic growth first happened in a. 1776, when Scottish inventor James Watt perfected a powerful and efficient steam engine b. 1701, when Jethro Tull Invented the seed drill. c. 1765, when Ell Whitney invented the cotton gin. d. 1776, when the American colonies declared their freedom.
Modern economic growth is attributed to the perfection of the steam engine by James Watt in 1776, marking the start of the Industrial Revolution by transitioning from manual to mechanized production.
Explanation:According to economic historians, modern economic growth first happened in 1776, when Scottish inventor James Watt perfected a powerful and efficient steam engine. This invention marked a pivotal moment in history, as it catalyzed the Industrial Revolution, transforming manufacturing processes and transportation. Watt’s steam engine not only made it possible to operate machinery without relying on water power or manual labor but also played a crucial role in improving the production and use of iron, facilitating a surge in industrial productivity and economic growth across Britain and eventually the world.
The choices provided in the question highlight various significant inventions and historical events, but the direct answer aligns with the advancements brought about by James Watt’s steam engine. This invention encapsulates the essence of the Industrial Revolution, making option a the correct answer. It underscores the transition from manual labor to mechanized production, representing a leap towards modern economic dynamics and industrialization.
What is an HR metric that would be especially valuable to an organization that wishes to determine whether it should continue to invest resources into the company "Wellness Program" (which has included benefits like free employee gym memberships and health education seminars)? a. SWOT analysis b. Employee satisfaction c. Delphi technique d. Staffing ratios
Answer:
The correct answer is letter "B": Employee satisfaction.
Explanation:
Employee satisfaction refers to the level of joy workers have at work with the current activities they perform. Companies tend to provide additional benefits to employees to increase their engagement with the firm which is believed to boost their efficiency, thus, the company's effectiveness.
Olivia deposited $800 at her local credit union in a savings account at the rate of 6.2% paid as simple interest. She will earn interest once a year for the next 7 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Olivia in 7 years?a. $1,147.20 b. $149.60 c. $1,218.88 d. $852.68
Answer:
a. $1,147.20
Explanation:
Simple interest means the same amount will be paid as interest per year.
We will use the following formula to solve for Olivia's interest after 7 years.
Interest = principal* interest rate* time
Principal= $800
Interest rate= 6.2%
Time= 7 years
Interest= 800* 0.062* 7
Interest= $347.20
So the total money owed to Olivia is = 800+ 347.20= $1,147.20
Item10 Time Remaining 24 minutes 35 seconds00:24:35Item 10Item 10 Time Remaining 24 minutes 35 seconds00:24:35A(n) ________ includes people who work together and possess similar skills or use the same knowledge, tools, or techniques to perform their jobs.
Answer:
A function
Explanation:
A function is defined as a set of activities carried out by a particular department that involves process initiation, transform information, and follow procedures to give an output.
Business functions encourage specialisation, examples include cash management, invoicing, loan disbursement,customer care and so on.
If the quantity supplied responds only slightly to changes in price, thenA. supply is said to be elastic.B. even a large decrease in demand will change the equilibrium price only slightly.C. an increase in price will not shift the supply curve very much.D. supply is said to be inelastic.
Answer:
D. supply is said to be inelastic.
Explanation:
When the change in the quantity supplied of any good is less sensitive due to change in the price, then the supply is known as the inelastic and If the quantity supplied responds only slightly to changes in price, then supply is said to be inelastic.
An investment will pay $200 at the end of each of the next 3 years, $300 at the end of Year 4, $500 at the end of Year 5, and $800 at the end of Year 6. If other investments of equal risk earn 5% annually, what is its present value? Round your answer to the nearest cent. $ 2255.30 What is its future value? Round your answer to the nearest cent. $ 3022.32
Answer:
Present value = $1,780.20
Future value = $2,385.64
Explanation:
Years Annual cash flows Discount factor @5% Present value
1 $200.00 0.9523809524 $190.48
2 $200.00 0.9070294785 $181.41
3 $200.00 0.8638375985 $172.77
4 $300.00 0.8227024748 $246.81
5 $500.00 0.7835261665 $391.76
6 $800.00 0.7462153966 $596.97
Present value $1,780.20
Now the future value is
Future value = Present value × (1 + interest rate)^number of years
= $1,780.20 × (1 + 0.05)^6
= $1,780.20 × 1.3400956406
= $2,385.64
Thomas Friedman, in The World is Flat, describes a world coming to a single global economy with a playing field "flattened" by Select one: a. technological changes. b. a scarcity of resources. c. a few large companies. d. None of the choices are correct.
Answer:
The correct answer is letter "A": technological changes.
Explanation:
American journalist and writer Thomas Friedman (born in 1953) in his 2005 book "The World Is Flat" exposes his conclusion on technology after research he conducted in India. According to Friedman, technology is shaping a new standard economy in the world boosted by computers and the use of the internet.
"Why is it important to understand the history of computers? Provide examples of each of the following mechanical computers, electromechanical computers, and early electronic computers"
Explanation:
Understanding the history of computers means understanding several important aspects that have been incorporated into our current life, our ways of working, communicating, shopping, etc. It is a way of understanding how technology has revolutionized and made life easier for the whole society.
The history of computing makes it possible to understand the developments of devices that are simple to calculate, even the technological advances that made the creation of modern computers possible.
Mechanical computers (1642-1945) were the first devices created to aid calculation, such as Pascaline, the first mechanical calculator developed in the world.
The first electromechanical computer, the Mark I, which was built in 1944, was 17 meters long by 2.5 meters high and had a mass of 5 tons. It performed calculations without human intervention but it took about 3 to 5 seconds to perform a multiplication.
The first electronic computer was the ENIAC, inaugurated on February 14, 1946. This computer was a thousand times faster than any previous computer and solved up to 5 thousand calculations of addition and subtraction, 350 multiplications or 50 divisions per second. It was a huge computer that weighed 27 tons and measured 5.50 x 24.40 m and consumed 150 kW. This computer was developed in the second world war, and its main objective was to perform ballistic calculations. Its "operating system" was through punched cards.
Understanding the history of computers helps us appreciate advancements and how technology has evolved. Examples of mechanical computers, electromechanical computers, and early electronic computers include Charles Babbage's Analytical Engine, the Harvard Mark I, and the ENIAC.
Explanation:It is important to understand the history of computers because it helps us appreciate the advancements that have taken place and how they have shaped our lives today. Understanding the history of computers allows us to understand how far we have come and how technology continues to evolve.
Mechanical Computers:
One example of a mechanical computer is Charles Babbage's Analytical Engine, designed in the 1830s. It was the first general-purpose computer that used punched cards to input data and perform calculations. Despite not being built during Babbage's lifetime, the design of the Analytical Engine laid the foundation for future computer developments.
Electromechanical Computers:
A popular example of an electromechanical computer is the Harvard Mark I, developed during the 1930s. It used switches, relays, and rotating shafts for computations and was primarily used for military calculations during World War II. The Mark I was a significant step forward in computer technology and paved the way for faster and more reliable computing.
Early Electronic Computers:
One of the early electronic computers is the ENIAC (Electronic Numerical Integrator and Computer), built in the 1940s. It used vacuum tubes to perform calculations and was used for tasks such as calculating artillery shell trajectories. The ENIAC was colossal in size and required a great amount of power, but it marked an important shift towards more efficient and powerful electronic computing.
You just won $70,000 on a scratch-off lottery ticket. You plan to save the money in a retirement account expected to return 8% per year. If you intend to retire in 45 years, how much are these lottery winnings expected to be worth when you retire? a. $942,089 b. $2,234,431 c. $4,788,067 d. $1,260,147 e. $2,615,364
Answer:
The correct answer is B.
Explanation:
Giving the following information:
You just won $70,000 on a scratch-off lottery ticket. You plan to save the money in a retirement account expected to return 8% per year.
The number of years is 45.
We need to use the following formula for future value:
FV= PV*(1+i)^n
FV= 70,000*(1.08)^45= $2,234,431.46
Does one brand have a more consistent number of chips per cookie? A. No. Both brands have roughly the same number of chips per cookie. B. Yes. The name brand has a more consistent number of chips per cookie. C. Yes. The store brand has a more consistent number of chips per cookie. D. There is insufficient information to draw a conclusion.
Without data on the number of chips per cookie for each brand, it is not possible to determine if one brand has a more consistent number of chips per cookie.
Explanation:The question is asking if one brand has a more consistent number of chips per cookie. To determine this, we would need data on the number of chips per cookie for each brand and analyze the consistency of the data. Without this information, it is not possible to draw a conclusion and the answer would be D. There is insufficient information to draw a conclusion.
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Jenny manages sales dealership of high-end luxury brand of automobile. Her target market is limited to a specific social class, which restricts her customer base. If her company creates cars for middle class consumers she risks:__________
Answer:
The correct answer is letter "A": cheapening his brand .
Explanation:
Businesses of luxury objects such as advanced-technology vehicles have a differential advantage related to other carmakers. Most of their customers prefer those cars because they give them a certain status in society and are accessible to a few people because of the high prices.
Then, if Jeff's companies decide to manufacture cars for the middle class, the dealer risks cheapening the brand but the number of customers could exponentially increase.
You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. If the annual interest rate stays constant at 6%, what is the value of these payments in today’s dollars? Round your answer to the nearest whole dollar. $16,747 $17,752 $14,235 $20,934
Answer:
The correct answer is A.
Explanation:
Giving the following information:
You have a partnership stake in a business that pays you equal payments of $3,000 at the end of each year for the next seven years. The annual interest rate stays constant at 6%.
To calculate the present value we need to use the ner present value formula:
NPV= ∑[Cf/(1+i)^n]
Cf= cash flow
For example:
Year 1= 3,000/1.06^1
Year 3= 3,000/1.06^3
Year 6= 3,000/1.06^6
NPV= $16,747.14
The value of the partnership's annual payments of $3,000 for seven years at a 6% interest rate, when calculated as the present value of an annuity, is roughly $16,747.
Explanation:This question pertains to the calculation of the present value of a series of equal annual payments, also known as an annuity. The present value (PV) is calculated as PV = Pmt / i * (1 - (1 + i)^-n), where 'Pmt' represents the value of each annual payment, 'i' the annual interest rate, and 'n' the number of years or payments. In this case, Pmt = $3,000, i = 0.06 (6% expressed as a decimal), and n = 7 years. Substituting these values in, we get PV = $3,000 / 0.06 * (1 - (1 + 0.06)^-7), which equates to approximately $16,747.
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Guggenheim offers a bond with annual payments and a coupon rate of 5 percent. The yield to maturity is 5.62 percent and the maturity date is 9 years away. What is the market price of a $1,000 face value bond?
Answer:
$957.12
Explanation:
In this question we have used the formula of the present value which is shown in the attachment
The NPER is a time period and the PMT is the monthy payments
Provided that,
Future value = $1,000
Rate of interest = 5.62%
NPER = 9 years
PMT = $1,000 × 5% = $50
The formula is shown below:
= -PV(Rate;NPER;PMT;FV;type)
So, after solving this, the answer is $957.12
Suppose you have noticed that the slope of the corporate yield curve has become steeper over the past few months. What factors might explain the change in the slope?
Answer:
The slope of the corporate yield curve has become steeper over the past few months; it means increasing risk and an increase in expected inflation.
Explanation:
There is an expected profit provided by any corporation to its investors during the time of investing. Expressing that in a graphical form is known as yield curve.
Yield curve is typically becoming steeper when:
• The time to maturity increases and associated interest rate increases as the time to maturity increases.
• It also means greater risk due to the higher likelihood of inflation in the long term and due to the debt issued for longer term.
The steepening of the yield curve may be influenced by factors such as changing interest rates, investor expectations of inflation or economic growth, and monetary policy adjustments. The interconnectedness of assets and changes in non-price variables that affect the supply of financial capital also contribute to shifts in the yield curve.
Explanation:The steepening of a corporate yield curve over time can be attributed to various factors. One key reason is a change in interest rates, particularly if short-term rates remain the same while long-term rates increase. This could be due to expectations of higher inflation or strong economic growth in the future, which would lead investors to demand higher yields for longer maturity investments to compensate for increased risks. Additionally, changes in monetary policy, such as those by the Federal Reserve during the pandemic recession that lowered short-term interest rates to near zero, can also alter the slope of the yield curve.
It is important to consider that all assets are linked, so when the interest rate on short-term government bonds rise, institutions may sell other assets, leading to a rise in their yields. Moreover, non-price variables like changes in income or future needs can shift the supply curve for financial capital, which in turn affects interest rates. The yield curve represents the relationship between interest rate (or yield) and maturity for similar debt instruments, usually Treasury securities, and thus can serve as a bellwether for the economy's direction.
The Uniform Guidelines on Employee Selection Procedures require validated procedures for selecting and promoting employees but do not apply to dismissal, transfer, or demotion.True/False
Answer:
TRUE
Explanation:
The Standard Employee Selection Regulations refer to all selection process used to take employment choices, including interviews, analysis of qualifications from job application forms, task experiences, physical requirements, and performance evaluations.
It does not represent any information about dismissal, reallocate or reduction in rank of employees.
how would you handle a situation in which the supervisor of another department approaches you with a strong complaint about one of your employees?
Answer:
i would ask for more proof and check on that employee
Explanation:
Blue Spruce Corp. recorded the following cash transactions for the year: Paid $133500 for salaries. Paid $55200 to purchase office equipment. Paid $15100 for utilities. Paid $5600 in dividends. Collected $279000 from customers. What was Blue's net cash provided by operating activities?
Answer:
$130,040
Explanation:
The cash flow using the indirect method has 3 groups of activities namely; operating, investing and financing.
Given the following activities;
Paid $133500 for salaries, Paid $55200 to purchase office equipment, Paid $15100 for utilities, Paid $5600 in dividends. Collected $279000 from customers,
The operating activities are Paid $133500 for salaries, Paid $15100 for utilities and Collected $279000 from customers,
Thus,
Blue's net cash provided by operating activities = -$133500 - $15100 + $279000
= $130,040
Phil, a quality assurance expert, recently left his position in the automotive industry and now works in construction equipment manufacturing. He needs to become familiar with who his company's competitors are, their competitive advantages, their locations, their product lines, and anything else he can learn about them. Phil is seeking ____________.
A. core competency
B. trade secrets
C. competitive intelligence
D. a means-end chain
E. corporate espionage
Answer:
C. competitive intelligence
Explanation:
Phil is seeking competitive intelligence because he is trying to find important information about the company's competitors.
The main reason why is tasked with finding information about competitor's locations, advantages and product lines is because his company wants to use that information for their own advantage, in order to gain a competitive edge over the other companies, or close the gap in case it is lagging behind.
Answer:
The correct answer is letter "C": competitive intelligence.
Explanation:
Competitive intelligence refers to the process of gathering external information in an attempt to improve a company's competitive advantage. That information is mainly related to the activity of competitors and the surrounding environment of the business which can also help to identify opportunities and threats.
The valuation of an MNC should rise when an event causes the expected cash flows from foreign to ____ and when foreign currencies denominating these cash flows are expected to ____.
Answer:
Decrease, Depreciate.
Explanation:
James is willing to sell his ipod for $20, and the going price on ebay is $15. Given this information, what would be the producer surplus for James? a. $20 b. $15 c. $0 o d.$5 $5
Answer:
c. $0
Explanation:
As the producer surplus is the difference between theminimum price the selles accept to sale and the market price of the good.
In this case the ipod is worth $15 while Jame's price is $20 Thus there is no surplus James mostly won't even sale his ipod.
Answer:
c. $0
Explanation:
Producer surplus is the difference between the amount a producer (in this case James) is willing to sell a product and the market price. In this case the market price is higher than the price James is willing to sell. Therefore the producer surplus is zero.
Residents of your city are charged a fixed weekly fee of $6 for garbage collection. They are allowed to put out as many cans as they wish. The average household disposes of three cans of garbage per week under this plan. Now suppose that your city changes to a "tag" system. Each can of garbage to be collected must have a tag affixed to it. The tags cost $2 each and are not reusable. What effect do you think the introduction of the tag system will have on the total quantity of garbage collected in your city? Under the "tag" system, the total quantity of garbage collected in the city will .
Final answer:
The introduction of the tag system is expected to reduce the total quantity of garbage collected in the city as residents may opt to limit their disposal to the average three cans.
Explanation:
In the current garbage collection system, residents are charged a fixed fee of $6 per week and can dispose of as many cans of garbage as they want. Under this system, the average household disposes of three cans of garbage per week. If the city changes to a tag system, where each can of garbage requires a $2 tag that is not reusable, it is likely that the total quantity of garbage collected in the city will decrease.
The introduction of the tag system will likely discourage residents from disposing of excess garbage, as they would need to purchase a tag for each additional can beyond the average three cans. This added cost incentivizes individuals to be more mindful of their waste and potentially reduce the amount of garbage they produce.
Therefore, the tag system is expected to reduce the total quantity of garbage collected in the city, as households may opt to limit their disposal to the average three cans to avoid the additional expense of purchasing tags.
Fred is willing to pay $5 for his first slice of pizza and $4 for his second slice of pizza. If the price is $3, and Joe buys two slices of pizza, he receives a total consumer surplus of A) $4. B) $2. C) $7. D) $3
Answer:
D) $3
Explanation:
Consumer Surplus refers to the difference between the actual price paid by a consumer and the price the consumer was willing to pay. Surplus arises in cases wherein the price consumer was willing to pay exceeds the price he actually paid.
In the given case, the consumer was willing to pay a total of $9 i.e ($5 + $4) for 2 units of pizza. He actually ended up paying $6 i.e ($3 × 2 slices).
Thus, his total consumer surplus can be calculated as $9 - $6 = $3
A 2014 study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. c. Suppose improvements in the processing and freezing of strawberries lowers the price of strawberry ice cream. Indicate the possible effects on demand, supply, or both, as well as on the equilibrium price and quantity of chocolate ice cream. The demand curve for chocolate ice cream shifts to the left. shifts to the right. does not shift. The supply curve for chocolate ice cream shifts to the right. does not shift. shifts to the left. The equilibrium price of chocolate ice cream could increase or decrease. increases. decreases. The equilibrium quantity of ice cream increases. could increase or decrease. decreases.
Explanation:
The demand curve for chocolate ice cream : shifts to the left
The supply curve for chocolate ice cream : does not shift
The equilibrium price of chocolate ice cream : decreases
The equilibrium quantity of ice cream : decreases
The law of supply and demand is a principle of the economy which explains the ties between supply and demand and how this relationship affects goods and services ' prices. The idea of supply surpassing demand for a product or service means costs are central to economic policy. Prices tend to rise as demand exceeds supply.
The _____ depicts the degrees and kinds of involvement a consumer brings to the purchase decision for different products. It also recognizes that people can be cognitively and affectively involved at the same time.
Answer: Kim-Lord model
Explanation: Some purchases made by consumers require a high degree of involvement such as cars, mobile phones etc on both cognitive and affective levels. Others do not. This phenomenon is explained by the Kim-Lord grid model of cognitive response from highly effective advertisements. The model states that purchase related decisions of consumers are based on or is highly influenced by affective and cognitive factors and that all aspects of advertising should be focused on these areas.
What is the appropriate accounting treatment for the value assigned to in-process research and development acquired in a business combination?
Answer:
Capitalize as an asset.
Explanation:
Answer:
The correct answer is: Capitalize as an asset.
Explanation:
Capitalize is an accounting term that describes a company's method of measuring the expense of the assets recorded. Many businesses have procedures on how and when to report purchases and costs as assets or expenses. These are listed on the Balance Sheet as an asset and depreciated as expenses are capitalized. Capitalized expenses make their way to the Income Statement by depreciation.
Thus, the purchases and costs of in-process research and development is capitalized as an asset.
Suppose Waterman Cable Company lent $125,000 to Comcast. On December 31, 2015, Comcast paid back the $125,000 and also paid $3,000 interest to Waterman Cable Company. Under U.S. GAAP, what would be the impact of the repayment on Waterman Cable Company's statement of cash flows using the direct method? a. The $125,000 would be shown as an increase in the funds in the Financing Section but the $3,000 would be shown as an increase in the Investing Section.b. The $128,000 would be shown as an increase in the funds in the Operating Section.c. The $125,000 would be shown as an increase in the funds in the Investing Section but the $3,000 would be shown as an increase in the Operating Section.d. The $128,000 would be shown as an increase in the funds in the Investing Section.
Final answer:
Under U.S. GAAP, the repayment of the loan principal would appear as an increase in the Investing Section, while the interest received would be reflected in the Operating Section of Waterman Cable Company's statement of cash flows.
Explanation:
The repayment of a loan by Comcast to Waterman Cable Company would affect the statement of cash flows for Waterman Cable Company under U.S. GAAP. When using the direct method, the repayment of the principal amount of the loan ($125,000) would be reflected as an increase in the Investing Section of the cash flow statement. This is because the principal repayment of a loan made to another entity is considered an investing activity. On the other hand, the interest received ($3,000) is considered an operating activity, as it is part of the company's primary revenue-generating activities, and thus it would be shown as an increase in the Operating Section.
Therefore, the correct answer to the student's question is C. The $125,000 would be shown as an increase in the funds in the Investing Section, but the $3,000 would be shown as an increase in the Operating Section.