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Finding Financial Information
Refer to the financial statements of American Eagle Outfitters given in Appendix B at the end of this book.
Required:
1. What does the company include in its category of cash and cash equivalents? How close do you think the disclosed amount is to actual fair market value? (Hint: The notes may be helpful in answering this question.)
2. What expenses does American Eagle Outfitters subtract from net sales in the computation of gross profit? How does this differ from Deckers’s practice and how might it affect the manner in which you interpret the gross profit?
3. Compute American Eagle Outfitters’s receivables turnover ratio for the current year. What characteristics of its business might cause it to be so high?
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Chapter 6 Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
- Which of the following is the amount of revenue reported on the income statement of a retail company? Cash sales for the period and collections from customers. Both cash and credit sales for the period. Cash sales and stockholders' investments. The cash collected from customers during the current period.arrow_forwardWhere are cash equivalents disclosed in the financial statements?The _____________ account on the balance sheet. A.) Accounts Recievable B.) Cash C.) Expenses D.) Merchandise Inventory E.) Salesarrow_forwardWhich of the following items will not be shown in the balance sheet of ahotel? A. customer loyalty value B. accounts payable C. Intangible assets D. accrued taxesarrow_forward
- What is the primary purpose of the Statement of Affairs ? a. To determine how much is owed by the customers b. To determine the amount for the owners equity c. To determine how is left in the bank account d. To determine if there was a gain or loss on disposal The term Margin is determined by which of the following operations? a. Adding all the incomes b. Dividing gross profit by sales c. Subtracting expenses from sales d. Multiplying capital by a decimal The Sandy Bay is a trader in sand. On December 31, 2010 the closing inventory was completely destroyed by flood rains. The following information is available: (1) Inventory at December 1, 2010 at cost $31,400 (2) Purchases for December 2010 $55,600 (3) Sales for December 2010 $88,800 (4) Standard mark-up is 25% Based on this information, what was the value of the closing inventory? a. $15,960 b. $17,760 c. $20,400 d. $25,800…arrow_forwardPorite Company recognizes revenue in the period in which it records an asset for the related account receivable, rather than in the period in which the account receivable is collected in cash. Porite's practice is an example of: Multiple Choice O Economic entity. The matching principle. Accrual accounting. Cash basis accounting.arrow_forwardexplain how the accounts receivable and inventory should be valued on the financial statements. if the business was to apply the correct measurement basis, determine the effect on: (1) profit and (2) assets. explain the difference between cash and accrual basis methods of accounting and how each method would produce different profit or loss for any given period. Explain why its preferred to use accrual-based accounting method, especially for mid and large size organisations.arrow_forward
- GAAP standards allow financial statements to answer the questions that investors or others might have. Which financial statement answers the question, "How much money did the company make from operations in a given period?" A. The balance sheet B. The income statement C. The statement of cash floarrow_forwardThe statement of financial position of Trend, Inc. is presented below. These are the only accounts in Trend's statement of financial position. Amounts indicated by question mark (?) can be calculated from the additional information given Cash Accounts rereivahle(net) Inventory Property. Dant and equipment (net ota LIabilitieS and Stockholders Equity Accounts Davable trade Income taxes Davable (current) Long-term debt Common stock Retained earnings Total Additional Information Gurrent ratio (at vear end) Total liabilities divided by total stockholders' equity 25,000 294,000 432,000 25.000 300.000 slavento turnover based on sales and ending inventor Inventor turnover based on cost of goods sold and ending inventory Gross margin for the year 1,5 to 1 0.8 15 times 10.5 times P315,000 What was rend' balance in trade accounts payable at year-end? What was Trend's balance in retained earnings at year-end? Was rends Dalance in the inventory account at year-end? The balance of Accounts…arrow_forwardAssume a company has a $350 credit ( not cash) sale. How would the transaction appear if the business uses accrual accounting ?arrow_forward
- Can a company reply on net income as a valid measure of cash needed to pay fixed charges? Explain you answerarrow_forwardWhich of the following transactions affects both the income statement and the balance sheet? O Collection of accounts receivable O Loan from bank O Depreciation on equipment O Declaration of cash dividend O Purchase of inventory on accountarrow_forwardDiscuss the principles of accrual accounting and how they differ from cash accounting. What are the advantages and disadvantages of each method, and how do they impact financial reporting?arrow_forward
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