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Flashcards in Current Assets & Liabilities Deck (11)
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1
Q
What is a current asset?
A
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
Q
What is a current liability?
A
A liability expected to be paid within 12 months or less
3
Q
How is the Quick Ratio calculated?
A
(Cash + A/R + Trading Securities) / Current Liabilities
4
Q
How is the Current Ratio calculated?
A
Currents Assets / Current Liabilities
5
Q
How is Working Capital calculated?
A
Currents Assets - Current Liabilities
6
Q
How is A/R Turnover calculated?
A
Credit Sales / Average A/R
7
Q
How is Inventory Turnover calculated?
A
COGS / Average Inventory
8
Q
How is Day Sales in Inventory calculated?
A
365 / Inventory Turnover
9
Q
How is Days to Collect A/R calculated?
A
Average A/R / Average Sales per Day
10
Q
How are gain contingencies recorded?
A
They are NOT accrued due to Conservatism
11
Q
When are loss contingencies recorded?
A
If Probable - they are accrued (if estimable) and disclosed

If Reasonably Possible - they are disclosed

If Remote - don't accrue or disclose