Behavior True False Later in the development of a market bubble, asset prices are affected more by the trading behaviors of inexperienced and naive investors and speculators than from the investment activities of longer-term, experienced and more knowledgeable market participants. Bubbles tend to end with sudden, unexpected and significant price increases, and a post-burst asset price that is greater than its intrinsic value. Asset bubbles tend to be corrected by a reversion of market prices toward the asset’s intrinsic price—although this price correction is often slower than it should be in an informationally efficient market.

Bridgeport company began operations at the beginning of 2018. the following information pertains to this company. 1. pretax financial income for 2018 is $115,000. 2. the tax rate enacted for 2018 and future years is 40%. 3. differences between the 2018 income statement and tax return are listed below: (a) warranty expense accrued for financial reporting purposes amounts to $7,500. warranty deductions per the tax return amount to $2,200. (b) gross profit on construction contracts using the percentage-of-completion method per books amounts to $94,700. gross profit on construction contracts for tax purposes amounts to $67,100. (c) depreciation of property, plant, and equipment for financial reporting purposes amounts to $61,800. depreciation of these assets amounts to $75,700 for the tax return. (d) a $3,600 fine paid for violation of pollution laws was deducted in computing pretax financial income. (e) interest revenue recognized on an investment in tax-exempt municipal bonds amounts to $1,500. 4. taxable income is expected for the next few years. (assume (a) is short-term in nature; assume (b) and (c) are long-term in nature.) (a) prepare the reconciliation schedule for 2017 and future years. (b) prepare the journal entry to record income tax expense for 2017. (c) prepare the income tax expense section of the income statement beginning with “income before income taxes.” (d) determine how the deferred taxes will appear on the balance sheet at the end of 2017.

6carla would like to buy a dress, a dresser for her bedroom, and a home theater system. she has one month's worth of living expenses in her emergency fund. carla decides to save for the home theater system. did carla make the right decision? why or why not? a. yes; her emergency fund is full and the other items will probably be less expensive. b. yes; she could save more for her emergency fund, but the home theater will be harder to save for. c. no; she should save more for her emergency fund because she has saved less than the recommended amount. d. no; she should have bought the dress and dresser first because she could afford them right away. reset next

Why is efficiency an important economic goal?