Questions from Accounting Principles


Q: On June 3, a company borrowed $50,000 by

On June 3, a company borrowed $50,000 by giving its bank a 60-day, interest-bearing note. On the June 30 statement of cash flows, where should this item be reported?

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Q: Explain the difference between financial reporting and financial statements.

Explain the difference between financial reporting and financial statements.

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Q: Which two ratios are the basic components in measuring a company’s operating

Which two ratios are the basic components in measuring a company’s operating efficiency? Which ratio summarizes these two components?

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Q: Sask Tractor borrowed $320,000 to purchase inventory on September

Sask Tractor borrowed $320,000 to purchase inventory on September 17, 2020 for 60 days at 6% interest by signing a note. On December 6, 2020, Sask Tractor sold a tractor for cash of $24,000 (cost $15,...

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Q: What does a relatively high accounts receivable turnover indicate about a company’s

What does a relatively high accounts receivable turnover indicate about a company’s short-term liquidity?

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Q: What is the significance of the inventory of days’ sales uncollected?

What is the significance of the inventory of days’ sales uncollected?

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Q: What information does the inventory turnover provide about a company’s short-

What information does the inventory turnover provide about a company’s short-term liquidity?

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Q: Why is the capital structure of a company, as measured by

Why is the capital structure of a company, as measured by debt and equity ratios, of importance to financial statement analysts?

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Q: Why must the ratio of pledged assets to secured liabilities be interpreted

Why must the ratio of pledged assets to secured liabilities be interpreted with caution?

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Q: Why would a company’s return on total assets be different from its

Why would a company’s return on total assets be different from its return on common shareholders’ equity?

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