Chapter 6 Outline

Chapter 6 Outline - Chapter 6 Liquidity of Short-Term...

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Chapter 6 Liquidity of Short-Term Assets; Related Debt-Paying Ability The Operating Cycle Cash Inventory Accounts Receivable Cash Current Assets Cash Restrictions on cash Compensating balances Specific restrictions for short-term creditors Cash and cash equivalents Marketable Securities(Short-term investments) Marketable Intent to convert to cash in the short-term Carried at fair market value Trading Available for sale Held-to-maturity (debt) Types 1. Equity securities 2. T bills 3. Govt bonds 4. Corp bonds
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Receivables Accounts receivable Trade receivable Note receivable Allowance for Doubtful Accounts 1. Match sale and bad debt expense 2. Based on an aging of accounts receivable 3. Usually shown net of allowance Long-term Receivables 1. Face amount of note has no interest or is unreasonable 2. Valued at present value 3. Difference is interest Long-term receivables may be shown as current when industry practice 1. Installment sales 2. Note disclosure required 3. Reclass for analysis purposes
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Chapter 6 Outline - Chapter 6 Liquidity of Short-Term...

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