chapter 8 and 9_classDE

chapter 8 and 9_classDE - Chapter 8 and 9 Quick Study...

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Chapter 8 and 9 Quick Study 8-3 (10 minutes) 1. A liquid asset refers to an asset that can be readily converted into another type of asset or be used to satisfy an obligation. A cash equivalent is a highly liquid short-term investment that can be readily converted to a known amount of cash and is sufficiently close to its maturity date so that its market value is relatively insensitive to interest rate changes. 2. Companies usually invest idle cash in cash equivalents to earn a higher return on these assets. 3. Effective cash management applies the following five principles: a. Encourages collection of receivables. b. Delays payment of liabilities. c. Keeps only necessary levels of assets. d. Plans expenditures. e. Invests any excess cash. Quick Study 9-6 (15 minutes) Dec. 31 Interest Receivable. .................................................................. 120 Interest Revenue. ................................................................ 120 To record the year-end adjustment for interest earned ($24,000 x 6% x 30/360). Maturity date
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chapter 8 and 9_classDE - Chapter 8 and 9 Quick Study...

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