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Ninja CPA Audit > Current Assets & Liabilities > Flashcards

Flashcards in Current Assets & Liabilities Deck (11):
1

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

2

What is a current liability?

A liability expected to be paid within 12 months or less

3

How is the Quick Ratio calculated?

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

4

How is the Current Ratio calculated?

Currents Assets / Current Liabilities

5

How is Working Capital calculated?

Currents Assets - Current Liabilities

6

How is A/R Turnover calculated?

Credit Sales / Average A/R

7

How is Inventory Turnover calculated?

COGS / Average Inventory

8

How is Day Sales in Inventory calculated?

365 / Inventory Turnover

9

How is Days to Collect A/R calculated?

Average A/R / Average Sales per Day

10

How are gain contingencies recorded?

They are NOT accrued due to Conservatism

11

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