What is the commercial paper's annual percentage rate (APR) assuming there are 360 days in a year? Expressed another way, a long-term asset is an asset that does not meet the criteria of being reported as a current asset. Company A reported beginning total assets of $199,500 and ending total assets of $199,203. Study 68 Terms | Accounting Chapter 2 Flashcards | Quizlet. Assets that are expected to be converted to cash or used in the business within a short period of time, usually one year. All of the fixed assets, all of the permanent current assets, and some of the temporary current assets of a firm are financed with long-term capital under the: c. originally scheduled for repayment within one year. Long-term assets include the following: Long-term investments. It measures a company's ability to meet its short-term obligations with its most liquid assets and therefore excludes inventories from its current assets. The 3 Ps, i.e. Start studying Balance Sheet Terms -Finance. Tangible Non-Current Assets are usually valued at Cost Less Depreciation. Notes receivable 6. The annual percentage rate (APR) is calculated as the: b. periodic rate times the number of borrowing (interest) periods in one year. Here’s a list of some of the most common asset accounts fond in a chart of accounts: Current Assets. 34 terms. Noncurrent assets are those that are considered long-term, … M1 includes cash, coins, demand deposits, and all checking account assets. Also, have a look at Net Tangible Assets Common liquidity ratios include the following:The current ratioCurrent Ratio FormulaThe Current Ratio formula is = Current Assets / Current Liabilities. A plant asset is an asset with a useful life of more than one year that is used in producing revenues in a business's operations. B) An increase in current assets decreases working capital. ), Knight Corporation recently issued 210-day commercial paper with a face value of $325,000 and a simple interest rate of 9 percent. B. Assume that there are 360 days in a year. Each monthly payment toward the loan amounts to: Stonehall Inc. recently borrowed $685,000 from its bank at a simple interest rate of 10 percent. ; Current liabilities are paid in cash/bank (settled by current assets) or by the introduction of new current liabilities. List of Assets Accounts – Examples. Again the difference between the returns of a financial statement analysis and interpretation based on management decisions were also discussed. C. Times interest earned ratio. The closing inventory of Big Corporation is $12,000, and its total cost of goods sold during the year is $420,000. The current ratio, also known as the working capital ratio, measures the capability of measures a company’s ability to pay off short-term liabilities with current a… Debt to equity ratio. Current assets can be sold to increase cash flow or ease debts and other liabilities. We will show you the formula and discuss each of the components below, including an example calculation.The current assets formula is:Current Assets = (Cash & Cash Equivalents) + (Accounts Receivables) + (Inventory) + (Marketable Securities) + (Prepaid Expenses) + (Other Liquid Assets) d. Working capital management of multinational corporations is far more complex than working capital management of purely domestic corporations. Suppose a firm purchases on credit terms of 2/15, net 30, and the firm always takes advantage of discounts. The current ratio Current Ratio Formula The Current Ratio formula is = Current Assets / Current Liabilities. A noncurrent asset is also known as a long-term asset. ; They are short-term obligations of a business and are also known as short-term liabilities. The loan is for eight months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount will be repaid in monthly installments. Inventory 4. longer than one year. (Round your answer to two decimal places.). June Corporation needs $125,000 to pay its bills. A) An increase in current assets increases working capital. The following information relates to Maze Corporation. Current assets are all the assets of a company that are expected to be sold or used as a result of standard business operations over the next year. The loan's annual percentage rate (APR) is: Which of the following statements is true of working capital management? Which of the following types of short-term credits is considered free in the sense that no explicit interest is paid on funds raised through this type of short-term credit? Plant assets are recorded at their cost and depreciation expense is recorded during their useful lives. The formula for the debt to asset ratio is as follows: Debt/Asset = (Short-term Debt + Long-term Debt) / Total Assets Where: 1. The acid-test ratio is also known as the: A. which can be touched. Based on the following information, the cash conversion cycle is: The following information relates to Zync Corporation. Related Article – What is Super Quick Ratio? ACCT 3003 Test 2. The typical asset categories classified as current assets include: — Cash and cash equivalents — Short-term investments You can find fixed assets beneath current assets on the balance sheet. Liquidity ratios are financial ratios that measure a company’s ability to repay both short- and long-term obligations. It’s easy to calculate the current assets of your company. a. a document specifying the terms and conditions of a loan, including the amount, interest rate, and repayment schedule. Gross working capital is the sum of all of a company's current assets (assets that are convertible to cash within a year or less). Maxwell Corporation recently issued 270-day commercial paper with a face value of $150,000 and a simple interest rate of 13 percent annually. The following information relates to Pelican Corporation. A bank makes a formal commitment to honor a revolving line of credit, but there is no such commitment for a general line of credit. In the aggressive approach to current asset financing: c. all of the fixed assets of a firm are financed with long-term capital, but some of the firm's permanent current assets are financed with short-term nonspontaneous sources of funds. alliekmoore. What is the annual percentage rate (APR) of the loan if the bank has a 15 percent compensating balance requirement and Zync Technologies currently holds no funds at the lending bank? The following information relates to Triblaze Corporation. With a revolving (guaranteed) credit agreement, banks generally: c. charge a commitment fee on the unused balance of the credit line. a detailed bank reconciliation that verifies not only beginning and end balances, but also validates deposits and withdrawals during the month Petty Cash a fund established for making small payments that are impractical to pay be check; also known as imprest cash fund Assuming there are 360 days in a year, the company's inventory conversion period is: The following information relates to MARS Corporation. Current Liabilities. Current assets are assets that are expected to be converted to cash within a year. EAR incorporates interest compounding in the computation, but APR does not. Tangible Assets Examples include Land, Property, Machinery, Vehicles etc. An arrangement in which a bank formally commits to lend up to a specified maximum amount of funds during a designated period is known as: d. an unsecured, short-term promissory note issued by large, financially sound firms to raise funds. In simple terms, assets are properties or rights owned by the business. Unit 7: Management Accounting Current assets are also known as circulating assets, circulating capital and floating assets. These resources are often referred to as liquid assets because they are so easily converted into cash in a short period of time. A compensating balance that is maintained by a firm in a bank: Which of the following statements is true about general and revolving lines of credit? Learn vocabulary, terms, and more with flashcards, games, and other study tools. Current assets are used to calculate the current ratio of a business. Accounts receivableAccounts ReceivableAccounts Receivable (AR) represents the credit sales of a business, which are not yet fully paid by its customers, a current asset on the balance sheet. D) An increase in current liabilities increases working capital a) A and C b) A and D c) B … b. What is the annual percentage rate of the non-free trade credit if the firm did not take discounts but did pay on the due date? Definition of Noncurrent Asset A noncurrent asset is an asset that is not expected to turn to cash within one year of date shown on a company's balance sheet. The following information relates to Smith Corporation. The quoted interest rate on the loan is 10 percent. Within one year. kelly_feeley. Short-term investments 5. Acct Exam 1. The company paid a transaction fee equal to 0.4 percent of the issue, which was taken out of the issue amount before the company received any funds. Which of the following statements is true of U.S. banks and financial institutions and their European counterparts? They may be classified as current or non-current.A. The loan is for nine months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. However, it is worthwhile to note that not all Tangible Non-Current Assets depreciate in value. M1 assets are also referred to as narrow money. Which of the following is also referred to as days sales outstanding (DSO)? https://quizlet.com/464842160/chapter-14-fin300-flash-cards Definition: A current asset, also called a current account, is either cash or a resource that are expected to be converted into cash within one year. Current vs. fixed assets. b. European banks often have very close relationships with the firms that borrow from them, which generally results in a greater willingness to provide more short-term, risky debt than is observed in U.S. banking organizations. In theory, they are liquid but practically current assets are not as easily convertible to cash as compared to liquid assets. The current ratio, also known as the working capital ratio, measures the capability of a business to meet its short-term obligations that are due within a year. Current assets include cash and assets that are expected to turn to cash within one year of the balance sheet date. Current ratio. Non-current assets are also known as fixed assets, long-term assets, long-lived assets etc. However, it’s important to make sure that all assets classified as “current” are included in the calculation, since there are many. 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