Current Assets & Liabilities Flashcards Preview

25+95+ > Current Assets & Liabilities > Flashcards

Flashcards in Current Assets & Liabilities Deck (12):
1

Q

A

2

What is a current asset?

Cash plus other assets that are expected to be sold or converted to cash during the current operating cycle

Includes: Demand deposits; cash equivalents; accounts receivable; inventory; pre-paids; and short-term investments

3

What is a current liability?

A liability expected to be paid within 12 months or less

4

How is the Quick Ratio calculated?

(Cash + A/R + Trading Securities) / Current Liabilities

5

How is the Current Ratio calculated?

Currents Assets / Current Liabilities

6

How is Working Capital calculated?

Currents Assets - Current Liabilities

7

How is A/R Turnover calculated?

Credit Sales / Average A/R

8

How is Inventory Turnover calculated?

COGS / Average Inventory

9

How is Day Sales in Inventory calculated?

365 / Inventory Turnover

10

How is Days to Collect A/R calculated?

Average A/R / Average Sales per Day

11

How are gain contingencies recorded?

They are NOT accrued due to Conservatism

12

When are loss contingencies recorded?

If Probable - they are accrued (if estimable) and disclosed

If Reasonably Possible - they are disclosed

If Remote - don't accrue or disclose