Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports. Accounting is done with two methods as follows: Cash Basis accounting: Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated. Accrual Basis accounting: Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period. To Calculate: The difference between the cash flows from operating activities and net income as % of net income.
Solution Summary: The author explains that accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is an art of recording, classifying, analyzing and summarizing the financial statement to produce meaningful information and reports.
Accounting is done with two methods as follows:
Cash Basis accounting:
Under the cash basis accounting all the cash receipts for the period are considered as revenue and all the cash payments for the period are considered as expenses and net income us calculated.
Accrual Basis accounting:
Under the accrual basis, the revenue and expenses are recorded accreting to their accrual for the given period and cash receipts and payments are not considered to decide their accrual. The net income is calculated using the accrued revenue and accrued expenses belonging to the particular period.
To Calculate:
The difference between the cash flows from operating activities and net income as % of net income.
Land, originally purchased for $27,761, is sold for $78,898 in cash. What is the effect of the sale on the accounting equation?
The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 20Y9 and December 31, 20Y8:
Dec. 31, 20Y9 Dec. 31, 20Y8Cash $399,800 $300,000 Temporary investments 426,700 328,700 Accounts and notes receivable (net) 392,500 358,300 Inventories 548,600 444,200 Prepaid expenses 299,400 166,800 Total current assets $2,067,000 $1,598,000 Accounts payable $307,400 $329,000 Accrued liabilities 222,600 141,000 Total current liabilities $530,000 $470,000
a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
20Y9 20Y8Working capital $$Current ratio Quick ratio b. The liquidity of Osborn Sisters Company has from 20Y8 to the 20Y9. The working capital, current ratio, and quick ratio have all . Most of these changes are the result of .
Based on the following information, what is the amount of McKee Company’s income before income taxes, assuming the accrual method of accounting?
Credit Sales totaled $320,000.
Cash Sales totaled $414,000.
Cash collected from customers for services not performed yet $93,000.
Dividend Income $4,500.
Cost of Goods Sold $336,000.
Salaries Expense $50,000.
Rent Expense $32,000.
Other Operating Expenses $80,000.
Interest Expense $21,000.
Prepaid Rent $3,000.
Gain on the sale of equipment $20,000.
Group of answer choices
$239,500
$332,500
$232,000
$236,000
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