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- Develop brief answers to each of the following questions: 1. Why does a decrease in receivable turnover create the need for cash from operating activities? 2. Why would ratiosthat include one balance sheet account and one income statement account, such as receivable turnover or return on assets, be qu estionable if they came from quarterly or other interim financial reports?Match the words to the definitions. Solvency Accounts Receivable Balance Sheet Noncurrent Assets Income Statement Retained Earnings Noncurrent Liabilities. Liquidity Current Assets Cash Flow Statement ✓ [Choose ] A forecast of the amount and timing of future cash inflows and outflows over some period of time. A summary of the revenues and expenses of a business over a given period of time. When net worth is greater than zero, or assets are greater than liabilities on the balance sheet. The ability to meet the day-to-day cash needs of the firm. Profits that are not paid out in dividends but are reinvested in the firm itself. Summarizes a firm's financial position at a given point in time and lists the firm's assets, liabilities, and net worth. Debts that others owe the business, usually arising from previous credit sales. Something the firms owns or uses that will not turn into cash within the next accounting period. Either cash or an items that will become cash in the next accounting…When financial statements for a single year are being presented, a priorperiod error should A. Be shown as an adjustment of the beginning balance of retained earningsB. Affect net income of the current yearC. Be shown in the statement of cash flowsD. Be included in other comprehensive income
- GAAP standards allow financial statements to answer the questions that investors or others might have. Which financial statement answers the question, "How much money did the company make from operations in a given period?" A. The balance sheet B. The income statement C. The statement of cash floPART A The following are extracts from the financial records of ABC Ltd for the year ended 31 August 2021. АBC Ltd Extract from the Statement of financial statement as at 31 Auqust 2021 31 August 2021 31 August 2020 - R - R Bank 50 000 20 000 Inventories - trade goods 22 000 30 000 Trade recelvables 77 00 69 D00 Trade payables 44 000 46 000 Prepaid expenses: 1 800 1 200 Accrued expenses: Interest 1 000 2 400 Accrued expenses; other 5 700 4 400 SARS - Income tax payable 8 000 3 000 Dividends payable 1 500 2 700 ABC Ltd Extract from the Statement of profit or loss and other comprehensive Income for the year ended 31 Auqust 2021 Sales 592 000 Cost of sales (301 000) Gross profit 291 000 Profit on sale of Equipment 9 000 Depreciation 41 000 Interest expense 2 600 Income tax expense 15 200 Profit for the year 110 300 Additional Information: 1. The dividends declared for the current year is R2 400.takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false Which statement is not true? Oa. Disclosures related to receivables are reported on the financial statement notes. Ob. Current assets are normally reported in order of their liquidity. Oc. All receivables that are expected to be realized in cash beyond 265 days are reported in the non-current assets section. Od. Cash and cash equivalents are the first items reported under current assets.
- Clark Bell started a personal financial planning business when he accepted $69,000 cash as advance payment for managing the financial assets of a large estate. Bell agreed to manage the estate for a one-year period beginning June 1, Year 1. Required Show the effects of the advance payment and revenue recognition on the Year 1 financial statements using the following horizontal statements model. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, and NC for net change in cash. If the account is not affected, leave the cell blank. How much revenue would Bell recognize on the Year 2 income statement? What is the amount of cash flow from operating activities in Year 2?Indicate the effect of the transactions listed in the following table on total current assets, current ration, and net income. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any necessary assumptions and assume an initial current ratio of more than 1.0. Cash is obtained through short-term bank loans.use attachment and additional information to answer the following Required:a. Write a statement of cashflows (indirect method) for the year ended December 31,Year 2. CHECK Year 2 CFO, $0 b. Prepare a side-by-side comparative statement contrasting two bases of reporting: (1) net income and (2) cash flows from operations. c. Which of the two financial reports in(b)better reflects profitability? Explain. Additional data for the period January 1, Year 2, through December 31, Year 2, are: Sales on account,$70,000. Purchases on account,$40,000. Depreciation,$5,000. Expenses paid in cash,$18,000(including$4,000 of interest and $6,000 in taxes). Decrease in inventory, $2,000. Sales of fixed assets for $6,000 cash; cost $21,000 and two-thirds depreciated (loss or gain is included in income). Purchase of fixed assets for cash, $4,000. Fixed assets are exchanged for bonds payable of $30,000. Sale of investments for $9,000 cash. Purchase of treasury stock for cash, $11,500. Retire bonds…
- Indicate whether each of the following would be added to or deducted from net income in determining net cash flow from operating activities by the indirect method: a. Increase in prepaid expenses b. Amortization of patents c. Increase in salaries payable d. Gain on sale of fixed assets e. Decrease in accounts receivable f. Increase in notes receivable due in 60 days g. Amortization of discount on bonds payable h. Decrease in merchandise inventory i. Depreciation of fixed assets j. Loss on retirement of long-term debt k. Decrease in accounts payable l. Increase in notes payable due in 30 days m. Increase in income taxes payablea. How to prepare the combined common-size, common–base year balance sheet for company? b. How to show the change in the account and note whether this change was a source or use of cash?- Why does a decrease in receivable turnover create the need for cash fromoperating activities? - Why would ratios that include one balance sheet account and one incomestatement account such as receivable turnover or return on assets, bequestionable if they came from quarterly or other interim financial reports?
