MGAB01H3 Chapter Notes - Chapter 10-13: Profit Margin, Quick Ratio, Dividend Yield

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P10–3

 
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 ())
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
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*,&&,,-.-,,,+
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 
.$# 
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,&&.0 121
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$,-8&!,,
*'&
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%-.  
P10–3 (continued)

&,,8&,8&&
,.9++ !9++
&,-9++&+.,!*+:
,,&,.9++.
!9++!8&&&,,;,9+
-,-+,!,+&!-&,;,9+,9++9&&,
,,,-+,!&*+,&
8&&,,&9+++!!!,!,&&+
.&&,-.+<,9+9&&=+8&
+&+,-+,!
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AP10–1
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5++
(@
?!&6' 7
%*+6 7
5+e invoice received January 8.
A+
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5$?!&"' >
B$?!&"' 
$,&+,,
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!&
*+" 
C,,9,:,+>D:,
%4,!&+,"'
(
5+"? )7
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5++
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Document Summary

Rent collected in advance (10/30 x ,000 = ,000). Statement of financial position at december 31, 2015: Accrual based accounting is more beneficial to financial analysts because it records revenues when they are earned and expenses when they are incurred, regardless of when the related cash is received or paid. Cash- based accounting only records revenues when they are received and expenses when they are paid. A financial analyst is looking towards the future of the company, so it is helpful to know how much cash will be coming into and out of the company at later dates. Cash based accounting limits financial analysts to only what has happened in prior periods and tells them very little about future events and cash flows that will affect the financial health of the company. Cash basis accounting may also be susceptible to manipulation. Collected rent revenue for 6 months of which one month was for the subsequent year.

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