F2: Financial Reporting and Disclosures

Question 1

What is the Accounts Receivable turnover ratio?

Answer 1

Sales (net)
_________________
Avg. Acct. Receivable

Question 2

What is the inventory turnover ratio?

Answer 2

Cost of Goods Sold
______________
Avg. Inventory

Question 3

What is accounts payable turnover ratio?

Answer 3

Cost of Goods Sold
________________
Avg. Acct. Payable

Question 4

What is the return on assets ratio?

Answer 4

Net Income
__________
Avg. Total Assets

Question 5

What is the total debt ratio?

Answer 5

Total Liabilities
____________
Total Assets

Question 6

What is the goodwill method in partnership accounting?

Answer 6

Goodwill is the implied values of the partnership based on new partner’s contribution. The implied value less the total contribution of all partners is the good will and is allocated to the old partners’ account balance based on their profit sharing percentages.

Question 7

What is the bonus method in partnership accounting?

Answer 7

When new the purchase price of new partner’s admission is greater than or less than the book value of the capital account, the difference is allocated between the old owners based on if new partner pays more (additional capital to old partners) or less (additional capital from old partners).

Question 8

Write out the lower of cost and market.

Answer 8

Cost. Replacement cost. Selling Price less Cost to complete = NRV (ceiling). NRV less normal profit = floor. Compare replacement cost between ceiling and floor and choose middle number. Compare that number to cost and choose lowest one.

Question 9

What is sum of years digits formula (depreciation)?

Answer 9

N(N+1)
______ N= Est. useful life
2

Question 10

What is double declining balance formula (depreciation)?

Answer 10

2 X 1/N x (Cost - Accum. Depr) N = Est. useful life.