Why is the discount method more costly than the simple interest method on a single-payment loan?
What will be an ideal response?
Answer: Under the discount method, with the interest taken out before you receive the loan, you actually receive a smaller principal than the stated principal of the loan.
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What is the primary difference between a static budget and a flexible budget?
a) The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold. b) The static budget contains only fixed costs, while the flexible budget contains only variable costs. c) The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. d) The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.
Explain what is involved in starting a business as a sole proprietor and the advantages to choosing this form of ownership
What will be an ideal response?