Financial Statement Analysis Exam 1
$thirteen,000 - ANS-At the end of the modern-day accounting length, account balances have
been as follows: Cash, $15,000; Accounts Receivable, $20,000; Common Stock, $8,000;
Retained Earnings, $14,000. Liabilities for the period had been:
$40,000 - ANS-A enterprise has assets of $a hundred,000
and liabilities of $60,000. What is
the amount of owners' equity?
1. Coins - most liquid
2. Debts receivable - very liquid
three. Stock - truly liquid
four. Plant property - now not liquid - ANS-Liquidity - how quick an object may be become cash
Rank their liquidity: money owed receivable, plant property, inventory and coins
1. Comparability - across companies, time collection
2. Verifiability - reliability
3. Timeliness - 10Q and 10K
four. Understandability - policies and profits - ANS-4 enhancing qualitative characteristics
1. Individuals - how you could select money to make investments
2. Investors/Creditors - fairness evaluation, shopping for organization's inventory
3. Regulator - IRS, tax revenue to acquire from groups
4. Nonprofits - ANS-Who uses accounting facts?
Accounts receivable (D) $three hundred
Service revenue (C) $three hundred - ANS-Fed Ex can pay $300 on the closing day of the
month
Accrual accounting transactions - ANS-Cash transactions:
- acquire bills from customers, get hold of pastimes earned, borrow money, pay expenses in
coins, pay off loans, problem stock
Non-coins transactions:
- sales on account, purchases on account, accrual of charges (no longer but paid), depreciation
cost, utilization of pay as you go charges, satisfy guarantee/obligation
Accrual Basis - ANS-- Record effect of transactions after they occur
- Required through GAAP
, - Record Revenue when earned and Expenses whilst incurred
Accruals - ANS-- Accrued fee: record price earlier than paying coins (salaries, hobby and
income tax)
- Accrued sales: record revenue before collecting coins (earned and could gather subsequent
length)
Accrued Revenue - ANS-- sales earned however not but received
- extended receivables and sales
Accumulated Depreciation - ANS-- Sum of all deprecation expense (increase over plant asset's
life)
- Contra-asset (everyday credit stability, always has a associate account)
- Book fee (expenses of plant asset much less accumulated depreciation)
Adverse opinion - ANS-issued when an auditor determines that the economic statements
materially depart from accounting standards and are not pretty offered. Generally, an analyst
might now not bother studying these statements
Balance Sheet - ANS-- Statement of Financial Position
- financial position on a selected day
- file assets, liabilities and stockholder's equity
Beginning commonplace stock + issuances - repurchases - ANS-How to remedy for finishing
commonplace stock
Beginning retained income + Net profits - dividends - ANS-How to clear up for finishing retained
profits
CA - Inventory
LTA - Plant Assets
CL - Accounts payable
LTL - Long term bonds payable - ANS-What are examples of contemporary property, long term
belongings, cutting-edge liabilities and long term liabilities?
Cash (D) $25,000
Common Stock (C) $25,000 - ANS-Issue $25,000 well worth of commonplace stock
Cash (D) $400
Unearned Revenue (C) $four hundred
Unearned revenue (D) $two hundred
Service revenue (C) $200 - ANS-Unearned revenue of $four hundred, then earns $two hundred
$thirteen,000 - ANS-At the end of the modern-day accounting length, account balances have
been as follows: Cash, $15,000; Accounts Receivable, $20,000; Common Stock, $8,000;
Retained Earnings, $14,000. Liabilities for the period had been:
$40,000 - ANS-A enterprise has assets of $a hundred,000
and liabilities of $60,000. What is
the amount of owners' equity?
1. Coins - most liquid
2. Debts receivable - very liquid
three. Stock - truly liquid
four. Plant property - now not liquid - ANS-Liquidity - how quick an object may be become cash
Rank their liquidity: money owed receivable, plant property, inventory and coins
1. Comparability - across companies, time collection
2. Verifiability - reliability
3. Timeliness - 10Q and 10K
four. Understandability - policies and profits - ANS-4 enhancing qualitative characteristics
1. Individuals - how you could select money to make investments
2. Investors/Creditors - fairness evaluation, shopping for organization's inventory
3. Regulator - IRS, tax revenue to acquire from groups
4. Nonprofits - ANS-Who uses accounting facts?
Accounts receivable (D) $three hundred
Service revenue (C) $three hundred - ANS-Fed Ex can pay $300 on the closing day of the
month
Accrual accounting transactions - ANS-Cash transactions:
- acquire bills from customers, get hold of pastimes earned, borrow money, pay expenses in
coins, pay off loans, problem stock
Non-coins transactions:
- sales on account, purchases on account, accrual of charges (no longer but paid), depreciation
cost, utilization of pay as you go charges, satisfy guarantee/obligation
Accrual Basis - ANS-- Record effect of transactions after they occur
- Required through GAAP
, - Record Revenue when earned and Expenses whilst incurred
Accruals - ANS-- Accrued fee: record price earlier than paying coins (salaries, hobby and
income tax)
- Accrued sales: record revenue before collecting coins (earned and could gather subsequent
length)
Accrued Revenue - ANS-- sales earned however not but received
- extended receivables and sales
Accumulated Depreciation - ANS-- Sum of all deprecation expense (increase over plant asset's
life)
- Contra-asset (everyday credit stability, always has a associate account)
- Book fee (expenses of plant asset much less accumulated depreciation)
Adverse opinion - ANS-issued when an auditor determines that the economic statements
materially depart from accounting standards and are not pretty offered. Generally, an analyst
might now not bother studying these statements
Balance Sheet - ANS-- Statement of Financial Position
- financial position on a selected day
- file assets, liabilities and stockholder's equity
Beginning commonplace stock + issuances - repurchases - ANS-How to remedy for finishing
commonplace stock
Beginning retained income + Net profits - dividends - ANS-How to clear up for finishing retained
profits
CA - Inventory
LTA - Plant Assets
CL - Accounts payable
LTL - Long term bonds payable - ANS-What are examples of contemporary property, long term
belongings, cutting-edge liabilities and long term liabilities?
Cash (D) $25,000
Common Stock (C) $25,000 - ANS-Issue $25,000 well worth of commonplace stock
Cash (D) $400
Unearned Revenue (C) $four hundred
Unearned revenue (D) $two hundred
Service revenue (C) $200 - ANS-Unearned revenue of $four hundred, then earns $two hundred
