A balance sheet is a statement businesses produce that outlines their assets and liabilities. It is a snapshot of their fixed assets‚ current assets‚ current liabilities and long term liabilities for a specific moment in time such as the end of a financial year. Using these figures‚ a business is able to calculate their net working capital; how much the business is worth‚ whether it can afford to expand and if it is a good venture for investors. There are different groups of people who are interested
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Accounting 1B - Post Exam 2 Project 1. Jensen Company purchased a new machine on September 1‚ 2012‚ at a cost of $128‚000. The company estimated that the machine has a salvage value of $8‚000. The machine is expected to be used for 80‚000 working hours during its 8-year life. Instructions: Compute depreciation using the following methods in the year indicated. (a) Straight-line for 2012 and 2013‚ assuming a December 31 year-end. (b) Declining-balance using double the straight-line rate for
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obligations are owed within one year. Current liabilities appear on the company’s balance sheet and include short-term debt‚ accounts payable‚ accrued liabilities and other debts. Current liabilities are separated from long-term liabilities on classified balance sheets. (You do not have to prepare a classified balance sheet‚ but it is the norm. Classified balance sheets also separate the current assets from the long-term assets). Knowing which liabilities will have to be paid within one year is important
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balancing the books is Assets = Liabilities + Equity In other words everything your business owns is balanced against claims against those items owned. Vendors and lenders‚ who account for most of your liabilities‚ have claims against the assets for the money you owe them. Owners of the business have claims against the remaining assets. What are assets and liabilities? Assets: In accounting an asset is regarded as being
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basic accounting equation to answer these questions. (a) The liabilities of Cummings Company are $90‚000 and the stockholders’ equity is $230‚000. What is the amount of Cummings Company’s total assets? (b) The total assets of Haldeman Company are $170‚000 and its stockholders’ equity is $90‚000. What is the amount of its total liabilities? (c) The total assets of Dain Co. are $800‚000 and its liabilities are equal to one-fourth of its total assets. What is the amount of Dain
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2. Qualitative 3. Objective 4. Qualitative 5. Objective SE2. 1. Full disclosure 2. Materiality 3. Cost benefit 4. Conservatism 5. Consistency SE3. 1. Property‚ plant and equipment 2. Current liability 3. Current liability 4. Not included 5. Owner’s Equity 6. Current Asset 7. Intangible Asset 8. Current Asset 9. Investment SE4. Balance Sheet May 31‚ 2011 Assets Current Assets Cash $200 Accounts Receivable $1100
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person owns. Including Liabilities Liabilities are debts or amounts of money that are owed to others by an individual or a business. Owner’s Equity or Net Worth A person’s or business’ assets‚ after all liabilities are deducted‚ is known as owner’s equity or net worth Balance Sheet Equations The balance sheet equation can be expressed in two ways: 1. To determine owner’s equity: Assets – Liabilities = Owner’s Equity 2. To determine total assets: Assets = Liabilities + Owner’s Equity Preparing
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assets 4. Long-term liabilities Solution 3-18 1. Acid-test ratio = Quick assets ÷ Current liabilities =1.20 Quick assets = Current assets - Inventories Quick assets = Current assets - $840‚000 Current assets ÷ Current liabilities =2.25 Current assets - $840‚000 ÷ Current liabilities =1.20 $840‚000 ÷ Current liabilities = 1.05 Current liabilities = $800‚000 Current assets ÷ $800‚000 = 2.25 Current assets = $1‚800‚000 2. Debt to equity ratio = Total liabilities ÷ Shareholders’ equity
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Ratio (unaudited) 2009 Ratio (unaudited) 2008 Ratio (audited) 2009 Ratio (audited) Current Ratio Current Ratio Current Ratio Current Ratio $130‚026 Assets $8‚380 Liabilities 15.52 to 1 $128‚867 Assets $23‚807 Liabilities 5.41 to 1 $130‚026 Assets $8‚380 Liabilities 15.52 to 1 $128‚867 Assets $ 23‚807 Liabilities 5.37 to 1 Quick Ratio Quick Ratio Quick Ratio Quick Ratio $41‚851 $37‚666 $79‚517 / $8‚380 9.49 to 1 $22‚995 $59‚787 $82‚782 / $23‚807 3.48
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1. Current Ratio = Current Assets / Current Liabilities Edison = 12‚800 / 3‚600 = 3.56 Stagg = 13‚800 / 3‚600 = 3.83 Thornton = 13‚800 / 3‚600 = 3.83 Quick Ratio = Quick Assets / Current Liabilities Edison = 11‚000 / 3‚600 = 3.05:1 Stagg = 10‚000 / 3‚600 = 2.78:1 Thornton
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