ACTG 2P31 Study Guide - Midterm Guide: Historical Cost, Fokker E.Ii
4 Apr 2016
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Chapter 5 summary: statement of financial posiion, provides info about company"s liquidity and solvency to assess risk of invesing in the company, inancial lexibility, provides details about company"s inancial structure (inanced by debt or equity) c. Liquidity: amount of ime for an asset to be converted into cash or unil liability has been paid, current raio, turnover raions, solvency, enterprise"s ability to pay its debts and related interest e. Limitaions: assets and liabiliies are stated at historical cost (higher reliability but less relevant, esimates are used, leaves out items that are relevant to business but cannot be recorded objecively, nonmonetary assets. Amorizaion, discount on bonds payable, allowances, sales/purchase discounts i. Coningencies: exising situaion whose outcome will not be resolved unil later, coningent gains are not recognized. Chapter 6 summary revenue recogniion: warranty, promise made by a seller to correct problems experienced with a product"s quanity, quality, or performance. When warranty is integral part of sale of product.
