Exam 6: Liquidity of Short-Term Assets; Related Debt-Paying Ability

Which of the following is not an acceptable inventory costing method?

Which of the following would not be classified as a current asset?

Which of the following types of business would normally have the longest operating cycle?

Because the cost of specific inventory items is not usually practical to determine, it is necessary for management to select a cost flow assumption.

Which of the following reasons should not be considered in order to explain why the receivables appear to be abnormally high?

Jones Company presents the following data for 2010. The days' sales in receivables is

To qualify as a marketable security, the investment must be readily marketable and it must be the intent of management to convert the investment to cash within the current operating cycle or a year, whichever is longer.

Typically, which of the following would be considered to be the most indicative of a firm's short-term debt paying ability?

Customer concentration can be an important consideration in the quality of receivables.

Which of the following types of businesses would normally have the shortest operating cycle?

Unrealized losses for long-term investments should usually be reported in the:

Smith Company presents the following data for 2010. The number of days' sales in inventory is:

When a company has receivables that are due beyond one year or accounting cycle from the balance sheet date, and when it is the industry practice to include these receivables in current assets, they will be included in current assets even though they do not technically meet the guidelines to qualify as current assets.

Which of the following ratios does not represent some form of comparison between accounts in current assets and accounts in current liabilities?

Under the allowance method, the charge off of a specific account receivable does not influence the income statement nor the net receivable on the balance sheet at the time of the charge off.

The lifo inventory costing method usually results in working capital being overstated.

Shaffer Company presents the following data for 2010. The merchandise inventory turnover for 2010 is:

The operating cycle is the time between the acquisition of inventory and the realization of cash from selling the inventory.

Szabo Company computed the following data for 2010. The estimated operating cycle for 2010 is:

The valuation problem from waiting to collect a receivable is ignored in the valuation of receivables and notes that are classified as current assets.