notes to F/S

Question 1

Which of the following disclosures should prospective financial statements include?

A.
Summary of significant accounting policies

B.
Summary of significant assumptions

C.
Both summary of significant accounting policies and summary of significant assumptions

D.
Neither summary of significant accounting policies nor summary of significant assumptions

Answer 1

Both summary of significant accounting policies and summary of significant assumptions

Question 2

Mint Co.’s cash balance in its balance sheet is $1,300,000, of which $300,000 is identified as a compensating balance. In addition, Mint has classified cash of $250,000 that has been restricted for future expansion plans as “other assets.” Which of the following should Mint disclose in notes to its financial statements?

A.
Compensating balance

B.
Restricted cash

C.
Both compensating balance and restricted cash

D.
Neither compensating balance nor restricted cash

Answer 2

Both compensating balance and restricted cash

Question 3

The following information was taken from Baxter Department Store’s financial statements:

Inventory at January 1 $ 100,000
Inventory at December 31 300,000
Net sales 2,000,000
Net purchases 700,000
What was Baxter’s inventory turnover for the year ending December 31?

Answer 3

Average inventory = (Beginning inventory + Ending inventory) ÷ 2:
•($100,000 + $300,000) ÷ 2 = $200,000

Inventory turnover = Cost of goods sold ÷ Average inventory:
•($100,000 + $700,000 - $300,000) ÷ (($100,000 + $300,000) ÷ 2) = 2.5

Question 4

DO NOT ACCURE GAIN MOTHER FUCKER!!!@!!! ONLY ACCRUE LOSS

Answer 4

DO NOT ACCURE GAIN MOTHER FUCKER!!!@!!! Law OF CONSERVATISM BIATCH!!!

Question 5

what is the current ratio

Answer 5

Current assets/current liabilities

Question 6

what is formula for inventory turnover ratio?

Answer 6

Accounting receivable turnover = Net credit sales ÷ Average receivables:
•$1,400,000 ÷ (($120,000 + $100,000) ÷ 2) = 12.727 times in a year

Turnover in days = 365 days ÷ Turnover in a year:
•365 ÷ 12.727 = 28.7 (rounded)

Question 7

what is formula for quick ratio?

Answer 7

Quick ratio = Current assets (excluding Inventories and Prepaid assets) ÷ Current liabilities:
•(Cash + Net accounts receivable + Short-term marketable securities) ÷ Current liabilities
•($60,000 + ($180,000 - $8,000) + $90,000) ÷ $400,000 = 0.81 (rounded)

All of the assets listed are current liabilities. Inventory and prepaid rent are excluded from the quick ratio.

Question 8

With respect to the footnote disclosure, what are U.S. GAAP and IFRS differences?

Answer 8

IFRS requires more footnote disclosure than U.S. GAAP.