Economics, Accounting & Business: Post your doubts here!

[:: A^]

Q15) The dead weight loss is the loss of resources to people due to any external forces. In this case, it is tariff. Originally, the quantity people demanded at price OPw was 10 units (example) but however, when tariff was imposed, the price of the good increased and therefore the quantity demanded fell to 5 units(example). The loss of 5 units measured graphically would be by area y.
In the diagram, initially, people were buying grey area worth of goods. However, after tariff was imposed, the value fell to blue area. Grey - blue is equal to red.
View attachment 40496

Let's see the effects of every option.
A) If money supply is increased, according to monetary transmission mechanism there would be an outward shift in AD, means the AD demand would increase overall. No movement so this cannot be the answer
B) Decrease in money supply would result in inward shift in AD curve, means that overall demand of an economy would fall. Vise versa of above statement.
C) If interest rates are increased, the people would save their money instead of investing it or demanding money. The output would not rise because there would be very less investment. Also because the cost of borrowing would increase (lonable funds theory)
D) Decrease in interest rate would lead people to demand for money and investment would increase. When this happens, the overall output is increased and that's what we are looking for. There would be movement along the curve from point J to K.
Therefore Answer is D

Jazakallah bro.. I got it now

 

[David Hussey]

Let's see the effects of every option.
A) If money supply is increased, according to monetary transmission mechanism there would be an outward shift in AD, means the AD demand would increase overall. No movement so this cannot be the answer
B) Decrease in money supply would result in inward shift in AD curve, means that overall demand of an economy would fall. Vise versa of above statement.
C) If interest rates are increased, the people would save their money instead of investing it or demanding money. The output would not rise because there would be very less investment. Also because the cost of borrowing would increase (lonable funds theory)
D) Decrease in interest rate would lead people to demand for money and investment would increase. When this happens, the overall output is increased and that's what we are looking for. There would be movement along the curve from point J to K.
Therefore Answer is D

a decrease in interest rates means the cost of borrowing falls, so people would borrow more and spend more, causing an increase in aggregate demand, why wont that shift the AD curve to right? why is it within the curve itself?

 

[David Hussey]

Guys can someone please help me out with explaining what are realised and unrealised profit and losses in a partnership change ?

Thankyou

Kind regards

Simply put, realized profits are gains that have been converted into cash. In order words, for you to realize profits from an investment you've made, you must receive cash and not simply witness the market price of your asset increase without selling. For example, if you owned 1,000 shares of XYZ Corporation, and the firm issued a cash dividend of $0.50 per share, you would realize a profit of $500 from your investment. This is a realized profit because you have received the actual cash, which cannot be lost due to changes in the marketplace.

 

[David Hussey]

anyone got the guess paper for accounts paper 4? i just hope there isnt budgets!

 

[:: A^]

a decrease in interest rates means the cost of borrowing falls, so people would borrow more and spend more, causing an increase in aggregate demand, why wont that shift the AD curve to right? why is it within the curve itself?

because the question is about a movement along the curve.

 

[David Hussey]

because the question is about a movement along the curve.

oh

 

[AlphaBeta]

anyone got the guess paper for accounts paper 4? i just hope there isnt budgets!

.

wat is most probably gona com for us ? any guesses ? did ur teachers tell anytng ? wat do u tink ?

 

[David Hussey]

wat is most probably gona com for us ? any guesses ? did ur teachers tell anytng ? wat do u tink ?

my sir said they are gonna remove process costing from next year, and unlikely it will come

 

[AlphaBeta]

my sir said they are gonna remove process costing from next year, and unlikely it will come

investment appraisal might come

 

[David Hussey]

investment appraisal might come

omg are you serious? i would be very happy if they dont give budgets!

 

[David Hussey]

dont u think budgets were kinda hard in the recent papers?

 

[AlphaBeta]

dont u think budgets were kinda hard in the recent papers?

not so hard as 2005 to 2001 papers .. they were damn ... -_-
btw http://www.investopedia.com/terms/s/sensitivityanalysis.asp
whats the example ? can u explain if u understand the example of sensitivity analysis

 

[:: A^]

wat is most probably gona com for us ? any guesses ? did ur teachers tell anytng ? wat do u tink ?

retirement of a partner might

 

[hashim2]

A company’s sales during a 365 day year are shown in the table.

cash sales: 179 580
credit sales: 927 100
total sales: 1 106 680

The trade receivables (debtors) turnover ratio at the year end is 42 days.

What is the end-of-year trade receivables (debtors) balance?

A. $22 074 B. $98 460 C. $106 680 D. $127 344

 

[hashim2]

Also, what is the difference between the "Interest Cover/ Income Gearing" ratio and the "Gearing" ratio ?

 

[David Hussey]

A company’s sales during a 365 day year are shown in the table.

cash sales: 179 580
credit sales: 927 100
total sales: 1 106 680

The trade receivables (debtors) turnover ratio at the year end is 42 days.

What is the end-of-year trade receivables (debtors) balance?

A. $22 074 B. $98 460 C. $106 680 D. $127 344

use debtors ratio and take only credit sales
42=(X/927100)*365
42*97100/365=X
X=106680
answer:C

 

[David Hussey]

Also, what is the difference between the "Interest Cover/ Income Gearing" ratio and the "Gearing" ratio ?

interest cover is how many "times" the interest is covering the operating profit or profit b4 interest, higher the value the better it is
income gearing is interest expressed as a percentage of the operating profit, lower value is favourable
gearing ratio measures the risk, it compares between fixed capital and total capital
more than 50% is highly geared, below that is low geared

 

[ktc]

anyone got the guess paper for accounts paper 4? i just hope there isnt budgets!

my sir said they are gonna remove process costing from next year, and unlikely it will come

investment appraisal might come

retirement of a partner might

you're all making speculations right?

See, in ( AS accounting) paper 2 for the first time , no costing question popped up in Oct/Nov 2013. That's like the first time CIE ever completely ignored costing in paper 2. Was that predictable? no. Instead they gave this 30 mark ratio analysis question where you had to state the formula of various ratios and explain its limitations ( purely conceptual :/).

So yeah, studying the entire syllabus is the most advisable decision ( that being said, I personally hope budgeting doesn't come either! >_<)

 

[David Hussey]

lol obviously you have to study the entire syllabus, but there is no harm in having guess papers
my previous teacher guess was almost close, she said we might get limitng factor and it did come in may june 2013
ill have to check with her again

 

[ktc]

And please do share her predictions here