Stocks

Question 1

How is Treasury Stock going to effect R/E

Answer 1

Only way R/E could ever be effected by T.S transaction is when we REISSUED mathematically at a LOSS and there is not enough in Paid-In-Capital ABSORB that loss.

Question 2

what happen to R/E when The second they declare dividends

Answer 2

the second they DECLARE dividends, R/E will be REDUCED

Question 3

How is dividends declare effect Cash Flow?

Answer 3

Even dividends declare, DOESN’T mean is Cash outflow

Question 4

what is Par Value Method?

Answer 4

with Par Value Method, any GAIN or LOSS mathematically is calculated the second we PURCHASED.

Question 5

What is Cost Method

Answer 5

it is

Question 6

What is liquidity Ratios ?

Answer 6

it measures of a firm’s SHORT TERM ability to pay maturing obligations.

1) Working Capital = Current Asset- Current Liability
2) Current Ratio = (Current Asset
3) Acid Test Ratio = (Cash equivalents + marketable securities + net receivables) / Current liabilities
4) Cash Ratio

Question 7

What is Quasi Reorganization?

Answer 7

Is an accounting adjustment (not a legal reorganization) that revise the capital structure of a corporation.
Corp. w/ a significant DEFICIT in RE to eliminate that deficit to have a fresh start

Question 8

Retained Earnings Formula?

Answer 8

Net Income/Loss
- Dividends (cash, property at FMV, Stock Declared)
+- Prior Period Adjustment
+- Accounting Changes Reported Retrospectively
+- Adjustment from Quasi Reorganization
= Retained Earnings