Lateral filing equipment consumes less space than a comparably sized standard filing cabinet
Indicate whether the statement is true or false.
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What is the most appropriate response to Cho’s question regarding the components of business risk?
Mary Benn, CFA, is a financial analyst for Twin Fields Investments, located in Storrs, Connecticut, U.S.A. She has been asked by her supervisor, Bill Cho, to examine two small Japanese cell phone component manufacturers: 4G, Inc. and Qphone Corp. Cho indicates that his clients are most interested in the use of leverage by 4G and Qphone. Benn states, "I will have to specifically analyze each company's respective business risk, sales risk, operating risk, and financial risk." "Fine, I'll check back with you shortly," Cho, answers. Benn begins her analysis by examining the sales prospects of the two firms. The results of her sales analysis appear in Exhibit 1. She also expects very little price variability for these cell phones. She next gathers more data on these two companies to assist her analysis of their operating and financial risk. When Cho inquires as to her progress Benn responds, "I have calculated Qphone's degree of operating leverage (DOL) and degree of financial leverage (DFL) at Qphone's 2009 level of unit sales. I have also calculated Qphone's breakeven level for unit sales. I will have 4G's leverage results shortly." Cho responds, "Good, I will call a meeting of some potential investors for tomorrow. Please help me explain these concepts to them, and the differences in use of leverage by these two companies. In preparation for the meeting, I have a number of questions": "You mentioned business risk; what is included in that?" "How would you classify the risk due to the varying mix of variable and fixed costs?" "Could you conduct an analysis and tell me how the two companies will fare relative to each other in terms of net income if their unit sales increased by 10 percent above their 2009 unit sales levels?" "Finally, what would be an accurate verbal description of the degree of total leverage?" The relevant data for analysis of 4G is contained in Exhibit 2, and Benn's analysis of the Qphone data appears in Exhibit 3: Exhibit 1. Benn's Unit Sales Estimates for 4G, Inc. and Qphone Corp. Company 2009 Unit Sales Standard Deviation of Unit Sales 2010 Expected Unit Sales Growth Rate (%) 4G, Inc. 1,000,000 25,000 15 Qphone Corp. 1,500,000 10,000 15 Exhibit 2. Sales, Cost, and Expense Data for 4G, Inc. (At Unit Sales of 1,000,000) Number of units produced and sold 1,000,000 Sales price per unit ¥108 Variable cost per unit ¥72 Fixed operating cost ¥22,500,000 Fixed financing expense ¥9,000,000 Exhibit 3. Benn's Analysis of Qphone (At Unit Sales of 1,500,000) Degree of operating leverage 1.40 Degree of financial leverage 1.15 Breakeven quantity (units) 571,429 a. Sales risk and financial risk. b. Operating risk and sales risk. c. Financial risk and operating risk
Christopher Scott is a self-employed computer consultant. He earned a net profit of $100,000 in 2016 from his business. During 2016, he paid $2,500 for health insurance coverage for himself and his wife. What is the amount and character of the deduction that the Scotts may claim on their 2016 individual tax return?
a) $2,500 itemized deduction subject to the 2%-of-AGI floor for miscellaneous itemized deductions. b) $1,750 itemized deduction not subject to the 2%-of-AGI floor for miscellaneous itemized deductions and $750 itemized deduction subject to the medical expense limitations. c) $2,500 deduction to arrive at adjusted gross income. d) $1,750 deduction from gross income to arrive at adjusted gross income and $750 itemized deduction subject to the medical expense limitations.