Chapter 3- Answers to questions
a. The economic effects of a long-term capital lease on the lessee are similar to that of
an equipment purchase using installment debt. Such a lease transfers substantially
the entire benefits and risks incid
Chapter- 4- Answers to questions
a. (i) The average cost method is based on the assumption that the average
costs of the goods in the beginning inventory and the goods purchased
during the period should be used for both the inventory and the cost
Chapter 7- Answers
a. Beginning balance of accounts receivable.
Net sales . 1,937,000
Total potential receipts.
Ending balance of accounts receivable.
Cash collected from sales.
b. Ending balance of inventory.
Cost of sales.
Generally accepted accounting principles (GAAP) is the set of rules and guidelines of
financial accounting that are currently mandated as the acceptable rules and guidelines
for preparing financial reports for the external users o
Comprehensive income computation:*
a. Computation:b. Balance sheet accounts affected:
Unrealized holding loss on available for sale securities
foreign currency translation gain
a. Investments declared to be available-for-sale or trading securities are reported at fair market
value on the balance sheet. Investments declared to be held-to-maturity are reported at
historical cost. Significant influential investments
Chapter 8- Answers to questions
a. At the present level of debt, ROCE = $157,500 / $1,125,000 = 14%.
In the absence of leverage, the noncurrent liabilities would be substituted with
equity. Accordingly, there would be no interest expense with all-eq
Chapter 10-Answers to questions
Forecasted Statement of Cash Receipts and Payments
For Year Ended December 31, Year 2
Add: Cash Receipts
- Ending ac
Chapter 1 - Notes
Business analysis and its objectives
Business analysis is the evaluation of a companys prospects and risks for business
decisions. Applicable business decisions include, among others, equity and debt
valuation, credit risk assessment, ea