This question A company's operating cycle is:a) The fiscal year periodb) The period between auditsc) The time between purchase of inventoryand collection of cashd) The manufacturing period only

a) The fiscal year period : Incorret optionThe fiscal year period refers to a company's accounting…

Answered: A company's operating cycle is: a) The…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 11E

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The descriptive sections of the annual report that provides insight into what the company does and the types of risks it lates is felt Select one: OA management discussion and analysis. B. the industry overview. OC. the audit opinion. D. notes to the financial statements. To best interpret the accounts receivable turnover ratio, the days in accounts receivable should be compared to the company's Select one: A sales revenue. B. credit terms. OC. inventory turnover. D. accounts receivable balance. Two companies have an identical amount of current assets and current liabilities Donald Inc. has 40% of its current assets invested in whereas Mickey Corp. has 30% of its current assets invested in inventory Which of the following statements is true? Select one: OA. Donald will have the higher quick ratio. OB. Donald will have the higher current ratio. OC. The companies are equally liquid because their current ratios are the same OD. Donald is less liquid than Mick
Inventory analysis A company reports the following: Determine (a) the inventory turnover and (b) the number of days sales in inventory. Round to one decimal place.
The accounts receivable turnover measures the number of times the average balance of inventory is sold during the period. percentage of accounts receivable turned over to a collection agency during the period. percentage of accounts receivable arising during certain seasons. number of times the average balance of accounts receivable is collected during the period.
1. The following information has been calculated for ABC Co: 52 days 42 days Trade receivables collection period Raw material inventory turnover period Work in progress inventory turnover period 30 days Trade payables payment period Finished goods inventory turnover period 45 days 66 days What is the length of the net operating cycle?
An operating cycle: a. is twelve months or less in length. b. is the average time required for a company to collect its receivables c. is used to determine current assets when the operating cycle is longer than one year. d. begins with inventory and ends with cash Most companies record revenue when they ship goods to customers not when they are delivered to customers. (Choose only one word that makes the statement incorrect)
The following data was taken from the general ledger and other records of Martinez Manufacturing Co. on July 31, the end of the first month of operations in the current fiscal year: Sales.........$50,000; Materials inventory (July 01)......15,000; Work in process inventory (July 01)..... 20,000; Finished goods inventory (July 01).......28,000; Materials purchased ...... 21,000; Direct labor.....12,500; Factory overhead (including $5,000 of indirect materials used and $2,500 of indirect labor cost).....11,500; Selling and Adminstrative expense.....8,000; Inventories on July 31: Materials.....16,000; Work in Process.....18,000; Finished good.....30,000 QUESTION: a) Prepare a statement of cost of goods manufactured b) determine the cost of goods sold for the month.
What is the fiscal year? Why might companies choose to use a fiscal year that is not a calendar year?
You are the auditor for Sigma Pty Ltd.As part of your preliminary work, you have obtained the following information: Current Year (unaudited) Previous Year(audited) Industry average i) Current ratio (Working capital ratio) 1.91 2.35 2.91 ii) Receivables turnover 57 days 51 days 73 days iii) Inventory turnover 72 days 65 days 96 days iv) Gross profit margin 20% 18% 20% v) Net profit margin 4% 4% 6% In addition you have found that: The financial controller resigned during the year and the company has yet to hire another financial controller. The accounts of the current year were prepared by the assistant accountant. For situation mentioned above: i). Which component of the Audit Risk Model (ARM) would be affected, and how? ii). Discuss how your audit plan would be affected. Note:Prepare your answers in a tabular format as follows: Component of ARM Effect on Audit Plan
Which one of the following commences on the day inventory is purchased and ends on the day the payment for that inventory is collected? Assume all sales and purchases are on credit. A. Inventory period B. Accounts receivable period C. Accounts payable period D. Operating cycle E. Cash cycle
ANALYSIS OF ACTIVITY MEASURES Based on the financial statement data in Exercise 24-1B, compute the following activity measures for 20-2 (round all calculations to two decimal places): (a) Accounts receivable turnover (b) Merchandise inventory turnover (c) Asset turnover
For the purpose of classifying liabilities as current or noncurrent, the term operatingcycle refers toa. the time period between the date the sale is made and the date the related revenue iscollected.b. the time period between the purchase of merchandise and the conversion of this merchandise back to cash.c. a period of one year.d. the average time period between business recessions
Activity measures: m. Calculate the accounts receivable turnover and number of days' sales in accounts receivable (based on a 365-day year) for the most recent year. n. Based on your analysis in m, do you believe that the company is doing an effective job at managing accounts receivable? What would you estimate the industry averages to be for the accounts receivable turnover and number of days' sales in accounts receivable? Explain. o. Calculate the inventory turnover and number of days' sales in inventory (based on a 365-day year) for the most recent year. p. Based on your analysis in o, to what extent does the company need to be concerned about its inventory management policies? In assessing the inventory management policies, would you be more interested in knowing current ratio or acid-test ratio information? Explain.

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A company's operating cycle is: a) The fiscal year period b) The period between audits c) The time between purchase of inventory and collection of cash d) The manufacturing period only