Accounting Exam 3
DSO equation
average net receivables/ average daily sales
what type of account in discount on bonds payable and what is its normal balance?
contra liability, debit
accounts payable turnover equation
costs of goods sold/ average accounts payable
working capital
current assets - current liabilities
quality of earnings suggests that
income from continuing operations is of more relevant predictor of future performance than income from one- time transactions
what kind of account is unearned revenue
liability account
which of the following is a characteristic of a corporation?
limited liability of stockholders
allowance for bad debts
not on estimated liability
the sale of inventory for cash is reported on the statement of cash flows under
operating activities
referred stock is least likely to have which of the following characteristics?
preference as to voting
min purpose of the statement of stockholders equity is to report
reasons for changes in the equity accounts
the main purpose of the statement of stockholders equity is to report
reasons for changes in the equity accounts
paid-in capital portion of stockholders equity does not include
retained earnings
what is most closely related to prior-period adjustments
retained earnings
when treasury stocks is sold for less than its cost, the entry should include a debit to
retained earnings
Cash conversion cycle
DIO + DSO - DPO
on an indirect method statement of cash flows, an increase in accounts payable would be
added to net income in the operating activities section
debt ratio
total liabilities/ total assets
stockholders equity section of a corporations balance sheet reports
treasury stock and not discount on bonds payable
failure to accrue interest expense results in
an overstatement of net income and an understatement of liabilities
the carrying value of bonds payable equals
bonds payable-discount on bonds payable
DPO equation
days in year/ accounts payable turnover
DIO equation
days in years/ inventory turnover
the purchase of treasury stock
decreases total assets and decrease stockholders equity
on an indirect method statement of cash flows, a gain on the sale of plant assets would be
deducted from net income in the operating activities section
what item appears on a statement of cash flows- indirect method
depreciation expense
recording estimated warranty expense in the year the related products are sold follows which accounting principle
expense recognition (matching)
on the statement of cash flows activities that obtain the cash needed to launch and sustain a company are
financing activities
on the statement of cash flows, activities that create long-term liabilities are usually
financing activities
gross margin %
gross margin/ net sales