exam 3

Question 1

what is a classified balance sheet

Answer 1

assests, current and longterm on the left

liabilities, current and long-term on the right

Question 2

liquidity (short term)

Answer 2

how quickly something can be converted to cash

Question 3

solvency

Answer 3

long term debt paying ability

Question 4

current ratio

Answer 4

current assets / current liabilities

Question 5

ADA

Answer 5

(contra asset) reduces the amount of an asset

Question 6

NRV (net realizable value)

Answer 6

AR-ADA=NRV

Question 7

AR turnover

Answer 7

sales/AR

Question 8

net realizable value

Answer 8

cash you expect to get

Question 9

days to collect AR

Answer 9

365/AR turnover

Question 10

Lifo

Answer 10

last in first out

Question 11

Fifo

Answer 11

first in first out

Question 12

current ratio

Answer 12

current assets/current liabilities
good is 2 or above

Question 13

weighted average

Answer 13

total cost of goods/#of units available

Question 14

outstanding check

Answer 14

we’ve seen it, just didn’t recognize it yet

Question 15

petty cash fund

Answer 15

purpose is to provide business units with sufficient cash to cover minor expenses

Question 16

what does lifo do?

Answer 16

lowers taxes, net income and inventory

Question 17

what does fifo do?

Answer 17

higher net income, higher inventory

Question 18

why are internal controls important?

Answer 18

they help to safeguard an organization and minimize risk.