ADPR5910 Exam 2 Notes (Siciliano 3)

ADPR5910 Exam 2 Notes (Siciliano 3) - Siciliano Chapter 3...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Siciliano Chapter 3: The Balance Sheet: Basic Summary of Value and Ownership Asset and Ownership – They Really Do Balance! - Balance Sheet: statement of financial condition - Left side: Assets - Right side: Liabilities and stockholders’ equity CURRENT ASSETS —Liquidity Makes Things Flow 1) Current assets: cash or expected to become cash “currently” (within 12 months) a. Produces the liquidity of a company i. Liquidity : the ability to meet current obligations with cash or other assets that can be quickly converted to cash, to pay bills as they come due. Having enough cash or assets that will become cash to write checks without running out of money ii. Insolvency : opposite of liquidity. Not having enough money to pay bills as they become due. Precursor to a creditor revolt or bankruptcy filing b. Main sources of working capital c. Cash and Cash Equivalents i. Cash = most liquid asset and is always first on the balance sheet ii. Includes petty cash fund, checking accounts, cash reserves (savings accounts, bank certificates, money market accounts, short term investments) iii. Can be spent immediately if needed 2) Accounts Receivable : amounts due from customers a. Found next to Current Assets section b. Largest section 3) Allowance for Bad Debt : Related to Accounts Receivable a. Not always shown separately b. A reserve with an estimated amount that the company provides for the possibility that some customers’ balances will not be paid at all and will be written off c. Big issue for companies that sell on credit d. Based on a percentage of all sales made in a given period e. Build reserves by creating a write-off to expenses i. Change uncollectible amounts against the reserve when it’s not likely to be collected in full
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/07/2011 for the course ADPR 5910 taught by Professor Reber during the Fall '10 term at UGA.

Page1 / 3

ADPR5910 Exam 2 Notes (Siciliano 3) - Siciliano Chapter 3...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online