答案和详解如下： Q1. Do the following characteristics have to be met in order to classify a liability as current on the balance sheet? Characteristic #1 – Settlement is expected within one year or operating cycle, whichever is less.
Characteristic #2 – Settlement will require the use of cash within one year or operating cycle, whichever is greater. Characteristic #1
Characteristic #2
A) No No B) Yes No C) No Yes Correct answer is A) A current liability is expected to be settled within one year or operating cycle, whichever is greater. It is not necessary to settle a current liability with cash. There are a number of ways to settle a current liability. For example, unearned revenue is a liability that is settled by providing goods or services. Q2. Firebird Company reported the following financial information at the end of 2007:
| in millions
| Merchandise inventory | $240 | Minority interest | 70 | Cash and equivalents | 275 | Accounts receivable | 1,150 | Accounts payable | 225 | Property & equipment | 2,160 | Accrued expenses | 830 | Current portion of long-term debt | 120 | Long-term debt | 1,570 | Retained earnings | 4,230 |
Calculate Firebird’s current assets and working capital. Current assets
Working capital
A) $1,665 million $420 million B) $1,665 million $490 million C) $1,735 million $490 million Correct answer is B) Current assets are equal to $1,665 ($275 cash and equivalents + $1,150 accounts receivable + $240 inventory). Working capital (current assets minus current liabilities) is equal to $490 ($1,665 current assets – $225 accounts payable – $830 accrued expenses – $120 current portion of long-term debt). Q3. Peterson Painting Company is a commercial painting contractor. At the beginning of 20X7, Peterson’s net working capital was $350,000. The following transactions occurred during 20X7: Performed services on credit | $150,000 | Purchased office equipment for cash | 10,000 | Recognized salaries expense | 54,000 | Purchased paint supplies on on credit | 25,000 | Consumed paint supplies | 20,000 | Paid salaries | 50,000 | Collected accounts receivable | 157,000 | Recognized straight-line depreciation expense | 2,000 | Paid accounts payable | 15,000 |
Calculate Peterson’s working capital at the end of 20X7 and the change in cash for the year 20X7. Working capital
Change in cash
A) $414,000 $82,000 B)
$416,000 $82,000 C) $416,000 $80,000 Correct answer is B) Transaction | Amount | Working capital | Cash | Performed services on credit | $150,000 | Increase A/R | < >> | Purchased PP&E for cash | 10,000 | Decrease cash | -$10,000 | Recognized salaries expense | 54,000 | Increase A/P |
| Purchased paint supplies on on credit | 25,000 | Increase inventories, increase A/P |
| Consumed paint supplies | 20,000 | Decrease inventories | < >> | Paid salaries | 50,000 | Decrease cash, decrease A/P | -$50,000 | Collected accounts receivable | 157,000 | Increase cash, decrease A/R | +$157,000 | Recognized straight-line depreciation expense | 2,000 | < >> | < >> | Paid accounts payable | 15,000 | Decrease cash, decrease A/P | -$15,000 |
The change in cash was $82,000 ($157,000 collections – $10,000 from equipment purchase – $50,000 salaries paid – $15,000 for payables). Working capital at the end of 20X7 is $416,000 ($350,000 beginning working capital + $150,000 increase in accounts receivable from services – $10,000 office equipment purchase – $54,000 salaries expense accrual – $20,000 consumed supplies). § Purchasing $25,000 of paint supplies on credit has no net effect on working capital (current assets and current liabilities increase). Consuming $20,000 of these supplies reduces working capital (current assets decrease). § Salary expense reduces working capital by $54,000 when recognized (current liabilities increase). Paying $50,000 of these salaries has no net effect on working capital (current assets and current liabilities decrease). § Collecting accounts receivable has no net effect on working capital (one current asset increases and another decreases). § Recognizing depreciation does not affect working capital. § Paying accounts payable has no net effect on working capital (current assets and current liabilities decrease). | 
发表于 2009-1-17 10:36
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