FAR 4

Question 1

Working capital is a measure of _____________

Answer 1

Solvency

Question 2

What is the formula for working capital?

Answer 2

Current Assets - Current Liabilities

Question 3

What is the formula for the current ratio?

Answer 3

Current Assets/Current Liabilities

Question 4

What is the formula for the quick ratio?

Answer 4

Cash + Net receivables + marketable securities)/Current Liabilities.

Question 5

True or false: Under GAAP, if you intend to and have the ability to refinance short term debt to long term debt, you can record the liability as non-current? What about under IFRS?

Answer 5

GAAP: True
IFRS: False

Question 6

What is the difference between the gross and net method in regards to sales discounts.

Answer 6

The gross method does not include the discount and the net method does.

Question 7

Trade discounts are essentially ____ discounts

Answer 7

quantity

Question 8

Accounts receivable are valued at

Answer 8

Net realizable value

Question 9

Notes receivable are valued at

Answer 9

Present Value

Question 10

Retail inventory contains only what kind of inventory?

Answer 10

Finished Goods

Question 11

Who pays in F.O.B. Shipping Point

Answer 11

Buyer

Question 12

Who pays in F.O.B. Destination

Answer 12

Seller

Question 13

Under GAAP inventory is on the books at_____________

Answer 13

Cost