Chapter 5 - Balance Sheet & Statement Of Cash Flows

Question 1

Liquidity

Answer 1

Describes the amount of time that is expected to elapse until an asset is realized or otherwise converted into cash

Question 2

Solvency

Answer 2

Refers to the ability of a company to pay its debts as they mature

Question 3

Cash and Cash Equivalents (Basis of Evaluation)

Answer 3

Fair Value

Question 4

Short-Term Investments (Basis of Evaluation)

Answer 4

Generally, fair value

Question 5

Receivables (Basis of Evaluation)

Answer 5

Estimated amount collectible

Question 6

Inventories (Basis of Evaluation)

Answer 6

Lower of cost or market

Question 7

Lower of cost or market (def)

Answer 7

If historical cost of inventory exceeds the net realizable value, then the inventory has lost its value and should be valued accordingly.

Question 8

Prepaid Expenses (Basis of Evaluation)

Answer 8

Cost

Question 9

Three Types of Investments

Answer 9

Held-to-maturity; Trading; Available-for-sale

Question 10

Held-to-maturity (valuation method)

Answer 10

Amortized Cost

Question 11

Trading (Valuation Method)

Answer 11

Amortized Cost

Question 12

Available-for-sale (valuation)

Answer 12

Amortized cost