ACCT 1201 Lecture Notes - Federal Insurance Contributions Act Tax, Accounts Payable, Quick Ratio

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skyraven864

22 Mar 2013

School

Northeastern University

Department

Accounting

Course

ACCT 1201

Professor

Ronen Gal-or

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Document Summary

Short-term liabilities: income taxes payable, accrued compensation, payroll taxes payable***, notes payable, current portion of long-term debt, deferred revenues. Liabilities defined and classified: liabilities - are probable debts or obligations that result from past transactions, which. Quick ratio: liquidity ratio similar to current ratio, the only difference is the numerator. Quick ratio = quick assets current liabilities. Quick assets = cash + marketable securities + accounts receivable. High quick ratio normally suggests good liquidity; too high a ratio suggests inefficient use of resources. Which of the following accounts would not be considered when calculating the quick ratio: marketable securities, inventory, accounts receivable, accounts payable. A company has a quick ratio of 1. 9 before paying off a large current liability with cash. Quick assets go down / current liabilities go down. Less: credit card discounts, sales returns & allowances, sales discounts. Less: operating expenses (sg&a: rent, utilities, salaries/wages, supplies, bad debt, Less: peripheral activities (asset/goodwill impairment, gain/loss on sale)

Related Questions

Identification of Current Liabilities, Contingencies, andCommitments LO3 P 1. Listed below are common types of currentliabilities, contingencies, and commitments:

a. Accounts payable

b. Bank loans and commercial paper

c. Notes payable
d. Dividends payable

e. Sales and excise taxes payable

f. Current portion of long-term debt

g. Payroll liabilities

h. Unearned revenues

i. Income taxes payable

j. Property taxes payable

k. Promotional costs

l. Product warranty liability

m. Vacation pay liability

n. Contingent liability

o. Commitment

Required

1. For each of the following statements, identify the categoryabove to which it gives rise or with which it is most closelyassociated:

1. A company agrees to replace parts of a product ifthey fail.

2. An employee earns one day off for each monthworked.

3. A company signs a contract to lease a buildingfor five years.

4. A company puts discount coupons in thenewspaper.

5. A company agrees to pay insurance costs foremployees.

6. A portion of a mortgage on a building is due thisyear.

7. The board of directors declares a dividend.

8. A company has trade payables.

9. A company has a pending lawsuit against it.

10. A company arranges for a line of credit.

11. A company signs a note due in 60 days.

12. A company operates in a state that has a sales tax.

13. A company earns a profit that is taxable.

14. A company owns buildings that are subject to propertytaxes.

2. Of the items listed from a to o above, which oneswould you not expect to see listed on the balance sheet with adollar amount? Of those items that would be listed on the balancesheet with a dollar amount, which ones would you con- sider toinvolve the most judgment or discretion on the part ofmanagement?

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ACCT 1201 Lecture Notes - Federal Insurance Contributions Act Tax, Accounts Payable, Quick Ratio

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