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Questions and Answers
Efficient management of net working capital can result in:
Efficient management of net working capital can result in:
- Higher profits (correct)
- Lower cash flow
- Greater costs
- Fewer sales
Match the following accounts to their proper balance sheet classification:
Match the following accounts to their proper balance sheet classification:
Interest revenue = Not Applicable Utilities payable = Current Liabilities Accounts payable = Current Liabilities Supplies = Current Assets Bonds payable = Long Term Liabilities Good Will = Intangible Assets Common Stock = Stockholders Equity Accumulated Depreciation (Equipment) = Property Plant & Equipment Equipment = Property Plant & Equipment Salaries and Wage Expenses = Not Applicable Debt Investments (Long-Term) = Long Term Investments Unearned Rent Revenue = Current Liabilities
All of the following are property, plant, and equipment except:
All of the following are property, plant, and equipment except:
- Land
- Buildings
- Supplies (correct)
- Machinery
What is a current asset?
What is a current asset?
An intangible asset:
An intangible asset:
Liabilities are generally classified on a balance sheet as:
Liabilities are generally classified on a balance sheet as:
Which of the following would not be classified as a long-term liability?
Which of the following would not be classified as a long-term liability?
On a classified balance sheet, current assets are customarily listed:
On a classified balance sheet, current assets are customarily listed:
All of the following are stockholders' equity accounts except:
All of the following are stockholders' equity accounts except:
Salaries and Wages Payable is classified as a:
Salaries and Wages Payable is classified as a:
On the balance sheet, companies usually list current assets in the order of largest to smallest.
On the balance sheet, companies usually list current assets in the order of largest to smallest.
In a corporation, Retained Earnings is a part of stockholders' equity.
In a corporation, Retained Earnings is a part of stockholders' equity.
Current assets are customarily the first items listed on a classified balance sheet.
Current assets are customarily the first items listed on a classified balance sheet.
The operating cycle of a company is determined by the number of years the company has been operating.
The operating cycle of a company is determined by the number of years the company has been operating.
What is the net income / loss for Culver Company for the year ended July 31, 2019?
What is the net income / loss for Culver Company for the year ended July 31, 2019?
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Study Notes
Efficient Management of Net Working Capital
- Efficient management can lead to higher profits.
- Key focus on optimizing cash flow and minimizing costs.
Balance Sheet Classifications for Lee Company
- Current Assets: Supplies.
- Current Liabilities: Utilities payable, Accounts payable, Unearned Rent Revenue.
- Long Term Liabilities: Bonds payable.
- Intangible Assets: Good Will.
- Stockholders Equity: Common Stock.
- Property Plant & Equipment: Accumulated Depreciation (Equipment), Equipment.
- Not Applicable: Interest revenue, Salaries and wage expenses, Debt Investments (Long-Term).
Property, Plant, and Equipment
- Supplies are not classified as property, plant, and equipment, while machinery, land, and buildings are included.
Current Assets Definition
- A current asset is expected to be converted to cash or used within one year.
Intangible Assets Definition
- Intangible assets lack physical substance but can be valuable.
Liabilities Classification
- Liabilities are categorized as current liabilities and long-term liabilities on the balance sheet.
Long-Term Liability Classification Exception
- Current maturities of long-term debt are not classified as long-term liabilities.
Order of Current Assets on Balance Sheet
- Current assets are listed in the order of liquidity, reflecting the expected cash conversion timeline.
Stockholders' Equity Accounts
- Investment in Stock is not classified as a stockholders' equity account.
Classification of Salaries and Wages Payable
- Classified as a current liability since it will be paid within the upcoming year.
Listing of Current Assets on Balance Sheet
- It is false that current assets are listed from largest to smallest; they are listed by liquidity.
Retained Earnings in Corporations
- Retained Earnings form a part of stockholders' equity in a corporation.
Position of Current Assets on Classified Balance Sheet
- True that current assets are usually listed first on a classified balance sheet.
Operating Cycle of a Company
- It is false to associate the operating cycle with the company's years of operation; it refers to the duration from cash outflow for production to cash inflow from sales.
Culver Company Financial Statements Overview (As of July 31, 2019)
-
Income Statement Highlights:
- Revenues: Service Revenue $62,300, Rent Revenue $8,100, Total Revenue $70,400.
- Major Expenses: Salaries and Wages Expense $51,200, Utilities Expense $22,600, Depreciation Expense $4,400.
- Resulted in a Net Loss of $7,800.
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Retained Earnings Statement Overview:
- Beginning Retained Earnings: $21,000.
- Net Loss of $7,800 and Dividends of $3,200 impact retained earnings calculations.
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