Questions from Financial Reporting

Q: Is the profitability of the entity considered to be of major importance

Is the profitability of the entity considered to be of major importance in determining the short-term debtpaying ability? Discuss.

Q: Does the allowance method for bad debts or the direct write-

Does the allowance method for bad debts or the direct write-off method result in the fairest presentation of receivables on the balance sheet and the fairest matching of expenses against revenue?

Q: When a firm faces an inflationary condition and the LIFO inventory method

When a firm faces an inflationary condition and the LIFO inventory method is based on a periodic basis, purchases late in the year can have a substantial influence on profits. Comment.

Q: Why could a current asset such as Net Assets of Business Held

Why could a current asset such as Net Assets of Business Held for Sale distort a firm’s liquidity, in terms of working capital or the current ratio?

Q: Before computing the acid-test ratio, compute the accounts receivable

Before computing the acid-test ratio, compute the accounts receivable turnover. Comment.

Q: Which inventory costing method results in the highest balance sheet amount for

Which inventory costing method results in the highest balance sheet amount for inventory? (Assume inflationary conditions.)

Q: Indicate the single most important factor that motivates a company to select

Indicate the single most important factor that motivates a company to select LIFO.

Q: Name the type of opinion indicated by each of the following situations

Name the type of opinion indicated by each of the following situations: a. There is a material uncertainty. b. There was a change in accounting principle. c. There is no material scope limitation o...

Q: List three situations in which the liquidity position of the firm may

List three situations in which the liquidity position of the firm may be better than that indicated by the liquidity ratios.

Q: Indicate the objective of the sales to working capital ratio.

Indicate the objective of the sales to working capital ratio.