Restrictive short-term financial policies with regard to current asset management include three basic actions. List and briefly describe each action.
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Current asset management is managing or handling the current assets of a company. Current assets refers to any asset that is either equivalent to cash or can be liquidated into cash within one accounting period or during a year. It is also termed as short term assets.
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- If a company has asset classes that include short-term and long-term investments, what criteria should they employ to determine if an asset is reported as a cash equivalent or an investment on their classified balance sheet? Examples needed and support using GAAPDiscuss and evaluate the impacts of an asset revaluation on future financial statement? Use and example to explain your answerWhat are the risk that could happen during the fixed asset acquisition process and how such risks could impact the financial statements assertions.
- If a company has asset classes that include short-term and long-term investments, what criteria should they employ to determine if an asset is reported as a cash equivalent or an investment on their classified balance sheet?Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of fi nancial statement elements? A . Current costExplain the historical cost concept as it applies to long-term operational assets. Why is the book value of an asset likely to be different from the current market value of the asset?
- What are the current asset financing strategies that firms adopt? a. Firms manage a variety of current assets. Permanent current assets are needed for the firm to maintain its business, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Each firm must devise a financing strategy that best fits its business situation and best manages its risk. Use the following table to identify the different current asset financing policies. Long-term capital finances all permanent current assets and some temporary financing needs. Conservative approach Maturity matching approach Aggressive approach b. All fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and seasonal needs of current assets are financed with short-term loans. Conservative approach Aggressive approach Maturity matching approach c. Some…The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis. True O FalseWhat is the purpose of charging depreciation in financial statements? A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use B To ensure that funds are available for the eventual replacement of the asset C To reduce the cost of the asset in the statement of financial position to its estimated market value D To account for the ‘wearing-out’ of the asset over its life
- Which of the following is NOT a requirement for an investment to be classified as “held for sale”? a. A buyer or potential buyer has been located. b. The asset is expected to be sold within a year. c. There is a committed plan by management to sell. d. The asset must be marketed at a reasonable price.What is the purpose of amortisation? To allocate the cost of an intangible non-current asset over its useful life To ensure that funds are available for the eventual purchase of a replacement non-current asset To reduce the cost of an intangible non-current asset in the statement of financial position to its estimated market value To account for the risk associated with intangible assetsWhat is the first impact on asset turnover of promptly expensing a cash outlay compared to capitalizing it? The asset turnover rate is defined as follows:
