ACCT 2000 Chapter 2 class notes 5e copy - Accounting 2000...

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Fundamentals of Financial Management
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Chapter 4 / Exercise 5A
Fundamentals of Financial Management
Brigham
Expert Verified
Accounting 2000Chapter 2 Class Notes1. Identify the sections of a classified balance sheet.2. Identify and compute ratios for analyzing a company’s profitability.3. Explain the relationship between a retained earnings statement and a statement of stockholders’ equity.4. Identify and compute ratios for analyzing a company’s liquidity and solvency using a balance sheet.5. Use the statement of cash flows to evaluate solvency.6. Explain the meaning of generally accepted accounting principles.7. Discuss financial reporting concepts.The Classified Balance SheetReports the assets, liabilities, and equity at a _____particular point in time________________Groups together similar assets and similar liabilities, using standard classificationsAssetsLiabilities andStockholders’ EquityAssets=liabilities + stockholders equityBalance sheet^-Cash-Supplies-Equipment-A/RStandard categories/ classifications:-Current assets-Long-term investments-Property, plant & equipment-Intangible assets Liabilities:-N/P-A/P-Unearned RevenueEquity:-Common stock-Retained earnings-Current liabilities-Long term liabilities (SE) –common stock-Retained earningsPage 1 of 16
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Fundamentals of Financial Management
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Chapter 4 / Exercise 5A
Fundamentals of Financial Management
Brigham
Expert Verified
Accounting 2000Chapter 2 Class NotesPage 2 of 16
Accounting 2000Chapter 2 Class NotesPage 3 of 16
Accounting 2000Chapter 2 Class NotesCurrent AssetsAssets that a company expects to _convert to cash_______________ or __use up_______ within one year or the operating cycle, whichever is longer.
Example: Tiger Company has the following assets at 12/31/14. Prepare a proper current assets section. Land$40,000Accounts Receivable$6,000Cash 8,000Equipment23,000Buildings 106,000Inventory 6,800Short-term investments 10,000Prepaid Insurance500Long-term investments 25,000Supplies700Accumulated Depreciation 15,000Patents 5,000Tiger CompanyBalance Sheet12/31/14AssetsCurrent AssetsConvert to cash:-Cash-Short-term investments-Account receivable -Inventory -supplies-prepaid insurance Page 4 of 16
Accounting 2000Chapter 2 Class NotesInvestments

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