For business alpha the total current asset calculation is to add all the assets In order to receive the full current assets. For business alpha the full current asset value is 251,000. The stock amount was 242,000 whilst the debt having 6,000 and the cash was 3,000. The current liabilities are something’s that are owned by the business which should be paid back by in less than one year. Examples of current liabilities are creditors.
This choice does, however, affect how individual shareholders’ accounts are reported in the balance sheet. Formally retiring shares restores the balances in both the common stock account and paid-in capital - excess of par to how those balances would have looked if the shares never had been issued. Any net increase in assets produced from the sale and ensuing repurchase is reflected as Paid-in capital—share repurchase. On the other hand, any net decrease in assets resulting from the sale and subsequent repurchase is repeated as a subtraction of retained earnings. Inversely, when a share repurchase is seen as treasury stock, the cost of the treasury stock is naturally disclosed as a decrease in total shareholders’ equity.
Interpretation: The Quick ratio is computed by dividing cash plus accounts receivable by total current liabilities. Current liabilities are all the liabilities that fall due within one year. This ratio reveals the protection afforded short-term creditors in cash near-cash assets. It shows the number of liquid assets available to cover each dollar of current debt. Any time this ratio is as much as 1 to 1 (1.0) the business is said to be in a liquid condition.
Liabilities are accounts that are owed out to a creditor, vendor or a bank. Liabilities are presented on the Balance Sheet and normally have a credit (negative) balance. A debit to a liability account decreases it while a credit will increase it. Liabilities are broken down to current and long term. The current liabilities are what is owed and is expected to be paid off on one year.
Client Understanding Paper ACC 541 August 27, 2012 Abstract This paper is intended to help a client understand why I, as a new Staff 1, am asking for information regarding the following topics: * Adjusting lower cost of market inventory on valuation * Capitalizing interest on building construction * Recording gain or loss on asset disposal * Adjusting goodwill for impairment An explanation of each topic is provided, along with specific examples of each and the potential effects each can have on financial reporting. Understanding their significance and how they impact those with a vested interest in a company’s financial picture is also described. Client Understanding Paper Client Memorandum August 26, 2012 To: XYZ Corporation Re: Clarification Regarding Analysis of Client Work Papers As a newly hired Staff I, with Alpha Accountants, I have taken over the responsibility of analyzing the work papers for your organization. In response to your recent questions, I would like to clarify the reason I am asking for information on the following topics: * Adjusting lower cost of market inventory on valuation * Capitalizing interest on building construction * Recording gain or loss on asset disposal * Adjusting goodwill for impairment
The accounts payable at the Fiscal Year End increased by almost 200%. You should as mentioned in the paragraph above use these additional funds to reduce the payables and to be able to take advantage of the accounts from your supplies. Also you purchased items for your inventory with installment payments made available to you from your suppliers. What I recommend is that not to purchase items with an installment plan but to purchase less items and take the discounts by paying for the items within the time period allotted to the discounts. The line of credit at the bank has almost reached
As a sale manager you can retrieve the first profit by other mean, including decreasing cost in administration (redundancy). Admin cost = 25000 Drop profit = 1285.8787 New admin cost = 23714.1213 That means the administration cost will be reduce at about 5.14 %. Task6 Consider the effects of the following deviations upon the Master Budget: 1. A 2.5% increase in materials costs 2. A 6% increase in Electricity costs.
Alternatives: A. Recognize compensation expense at each year end and disclose swap transactions in the notes to the financial statements: Record the following entry at year end Dr. Compensation Expense XXX Cr. Paid-in Capital-Stock Options XXX This will reduce pre tax income and increase total paid-in capital B. Disclosure in notes to financial statements only IV.
Calculate the following financial ratios. TIP: If you don't remember how to calculate financial ratios, review the Calculating Financial Ratio pages from Section 9, Lesson 2 of this course. a. A company makes a net profit before tax of $12,000 and has $20,000 in total equity. Calculate the company's return on equity as a percentage.
The first way to improve working capital is to make the excess liquid funds work for the company. These funds should be invested back into the company. This can be accomplished by reducing long-term liabilities with high interest rates such as the mortgages on facilities. The second is to manage the inventory held by the company. Currently Competition Bikes purchases inventory for production the month before it goes to the production line.