Current Assets & Liabilities Flashcards

1
Q

What is a current asset?

A

Cash plus other assets that are expected to be sold or converted to cash during the current operating cycle

Includes: Demand deposits, cash equivalents, accounts receivable, inventory, pre-paids, and short-term investments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a current liability?

A

A liability expected to be paid within 12 months or less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

How is the Quick Ratio (Acid-Test Ratio) calculated?

A

(Cash + A/R + Trading Securities) / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How is the Current Ratio calculated?

A

Currents Assets / Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How is Working Capital calculated?

A

Currents Assets - Current Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How is A/R Turnover calculated?

A

Credit Sales / Average A/R

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How is Inventory Turnover calculated?

A

COGS / Average Inventory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How is Day Sales in Inventory calculated?

A

365 / Inventory Turnover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How is Days to Collect A/R calculated?

A

Average A/R / Average Sales per Day

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How are gain contingencies recorded?

A

They are NOT accrued due to Conservatism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When are loss contingencies recorded?

A

If Probable - they are accrued (if estimable) and disclosed

If Reasonably Possible - they are disclosed

If Remote - don’t accrue or disclose

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Calculate Ending Accounts Receivables

A

BAR + Sales - Collections (RWOCC) = EAR

Beginning Accounts Receivable (BAR) + Sales - Collections (Returns, Write offs, Customer Collections) = Ending Accounts Receivables

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How calculate Allowance for Discounts

A

Receivable is age category x Percent taking discount x discount rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a write off

A

To write off is to remove an amount from the accounting records, usually by a corresponding entry to an expense or allowance account, as to write off a specific account receivable with a credit to accounts receivable and a debit to the allowance for uncollectible accounts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly