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.
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.
The Rule of 78s is computed on a sum-of-the-payment-periods digits basis. On a one-year loan with monthly payments, for example, the sum of the digits I through 12 is 78. DAVIDSON, SCINDLEt, STICKNEY & WELLS, supra, at 47. The following is an interest calculation under the Rule of 78s: a borrower takes out a 30-year loan, with annual interest payments calculated under tile Rule of 78s. To determine what part of each payment will constitute interest, the total amount of the interest will be multiplied by a fraction.
CASH AND CASH EQUIVALENTS -- Cash equivalents are comprised of certain highly liquid investments with original maturities of less than three months. Trading securities, held-to-maturity securities and available-for-sale securities are either current or noncurrent depending on when they are expected to mature or to be sold. However, it's not
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.
When a net operating loss is carried back to a non-loss year, the net operating loss is a miscellaneous itemized deduction. ANS: F An NOL is a business loss. Therefore, the deduction is a deduction for AGI. PTS: 1 REF: p. 7-23 MULTIPLE CHOICE 1. Mable is in the business of factoring accounts receivable.
| Liquidity RatioCurrent Ratio | Current assets/ Current liabilites | 203,100,000/37,500,000 | 5.416 | a measurement of CanGo to pay off current liabilities using current assets | Liquidity RatioQuick Ratio | current assets-inventory/current liability | 203,100,000-32,000,000/37,500,000 | 4.5627 | Measures CanGo ability to meet its short term obligation MSOT liquid assets. | Profitability RatioReturn On Equity | | | |
only the portion of the loss attributable to inventory sold during the period is recorded in the financial statements. B. the market value figure for ending inventory is substituted for cost and the loss is buried in cost of goods sold C. a loss is recorded directly in the inventory account by crediting inventory and debiting loss on inventory decline. D. there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale. 15) Designated market value A. may sometimes exceed net realizable value. B. should always be equal to net realizable value less a normal profit margin.
Calculate the PAYG instalment income and the instalment due to the ATO. Complete the BAS Summary boxes below. Using a general journal format, explain how the payment transaction would be recorded in the accounting system. Supplies you have made Total sales & income & other supplies including capital (GST inclusive) G1 Exports Other GST-free supplies Input taxed sales & income & other supplies ADD G2 + G3 + G4 G1 minus G5 G6 Adjustments (must be total transaction value, i.e. GST inclusive) ADD G6 + G7 Divide G8 by eleven G9 66 191 728 100 G2 G3 Acquisitions you have made Capital acquisitions (GST inclusive) All other acquisitions (GST inclusive) ADD G10 + G11 Acquisitions for making input taxed sales & income & other supplies Acquisitions with no GST in the price Total estimated private use of acquisitions + non-income tax deductible acquisitions ADD G13 + G14 + G15 G7 G8 0 728 100 G12 minus G16 Adjustments (must be total transaction value, i.e.
Preferred stock issued in exchange for land would be reported in the statement of cash flows in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section ANS: C DIF: Easy 6. Cash paid to purchase long-term investments would be reported in the statement of cash flows in a. the cash flows from operating activities section b. the cash flows from financing activities section c. the cash flows from investing activities section d. a separate schedule ANS: C DIF: Easy 7. A statement of cash flows would not disclose the effects of which of the following transactions? a. stock dividends declared b. bonds payable exchanged for capital stock c. purchase of treasury stock d. capital stock issued to