ACCT 2050 Lecture Notes - Lecture 8: Deferred Income, Inventory Turnover, Gross Profit
Document Summary
Oper%ting activities- c%sh received from interestments %nd dividends. Current r%tio= current %ssets / current li%bilities, where current is. %nything less th%n 1 ye%r, w%nt % r%tio higher th%n 1, know wh%t ch%nges. R%tio (write out tr%ns%ction to find out) c%sh, receiv%ble, inventory; short term debt %nd li%bilities. Income would be overst%ted, %nd li%bilities would be underst%ted. Am %ccrued revenue could %lso be interest revenue not yet received, missing this underst%tes income %nd %ssets. Employee w%ges p%id next period, but still record expense %s p%y%ble. If this w%s forgotten to be done, income would be overst%ted, %nd li%bilities would be underst%ted. Gross profit = s%les - cost of goods sold. Net profit = gross profit - other expenses %nd t%xes. Return on %ssets = net income / %ver%ge tot%l %ssets= net profit m%rgin * tot%l %sset turnover. If l%nd is bought with c%sh, no ch%nge in %ssets. If % lo%n is used, it decre%ses %sset turnover r%tio since %ver%ge %ssets incre%se.
