exam 3 Flashcards
what is a classified balance sheet
assests, current and longterm on the left
liabilities, current and long-term on the right
liquidity (short term)
how quickly something can be converted to cash
solvency
long term debt paying ability
current ratio
current assets / current liabilities
ADA
(contra asset) reduces the amount of an asset
NRV (net realizable value)
AR-ADA=NRV
AR turnover
sales/AR
net realizable value
cash you expect to get
days to collect AR
365/AR turnover
Lifo
last in first out
Fifo
first in first out
current ratio
current assets/current liabilities
good is 2 or above
weighted average
total cost of goods/#of units available
outstanding check
we’ve seen it, just didn’t recognize it yet
petty cash fund
purpose is to provide business units with sufficient cash to cover minor expenses
what does lifo do?
lowers taxes, net income and inventory
what does fifo do?
higher net income, higher inventory
why are internal controls important?
they help to safeguard an organization and minimize risk.
