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Flashcards in -Current Assets & Liabilities Deck (11)
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1
Q

What is a current asset?

A

Current assets include cash plus other assets that are expected to be sold or converted to cash during the current operating cycle.

These include:

  • Demand deposits
  • Cash equivalents
  • Accounts receivable
  • Inventory
  • Pre-paids, and
  • Short-term investments

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2
Q

What is a current liability?

A

Current liability is a liability expected to be paid within 12 months or less.

3
Q

How is the Quick Ratio calculated?

A

(Cash + A/R + Trading Securities) / Current Liabilities

4
Q

How is the Current Ratio calculated?

A

Currents Assets / Current Liabilities

5
Q

How is Working Capital calculated?

A

Currents Assets - Current Liabilities

6
Q

How is A/R Turnover calculated?

A

Credit Sales / Average A/R

7
Q

How is Inventory Turnover calculated?

A

COGS / Average Inventory

8
Q

How are the Day Sales in Inventory calculated?

A

365 / Inventory Turnover

9
Q

How are the Days to Collect A/R calculated?

A

Average A/R / Average Sales per Day

10
Q

How are gain contingencies recorded?

A

They are NOT accrued due to Conservatism.

11
Q

When are loss contingencies recorded?

A

If Probable - they are accrued (if estimable) and disclosed.

If Reasonably Possible - they are disclosed

If Remote - don’t accrue or disclose