Question: The current asset section of Sanford & Son, CPA's balance sheet consists of cash, accounts receivable, investments, and prepaid expenses. The 2013 balance sheet reported the following: cash, $110,000; investments, $22,000; prepaid expenses, $18,000; noncurrent assets, $422,000; and shareholders' equity, $350,000. The current ratio at the end of the year was 1.6 and the debt to equity ratio was 0.8.Determine the following 2013 amounts and ratios:a. Current liabilities.b. The acid-test ratio.c. Accounts receivable.d. Long-term liabilities. United Supply has a $5 million liability at December 31, 2021, of which $1 million is payable in each of the next five years. United Supply reports the liability in the balance sheet as a: a. $5 million current liabilityb. $5 million long-term liability c. $1 million current liability and a $4 million long-term liabilityd. $4 million current liability and a $1 million long- term liability Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current? a. It may cause the firm to appear less risky to investors and creditors. b. It may increase interest rates on borrowing. c. It may cause the company to appear more stable, commanding a higher stock price for new stock listings. d. It may reduce interest rates on borrowing.
Question: The current asset section of Sanford & Son, CPA's balance sheet consists of cash, accounts receivable, investments, and prepaid expenses. The 2013 balance sheet reported the following: cash, $110,000; investments, $22,000; prepaid expenses, $18,000; noncurrent assets, $422,000; and shareholders' equity, $350,000. The current ratio at the end of the year was 1.6 and the debt to equity ratio was 0.8.Determine the following 2013 amounts and ratios:a. Current liabilities.b. The acid-test ratio.c. Accounts receivable.d. Long-term liabilities. United Supply has a $5 million liability at December 31, 2021, of which $1 million is payable in each of the next five years. United Supply reports the liability in the balance sheet as a: a. $5 million current liabilityb. $5 million long-term liability c. $1 million current liability and a $4 million long-term liabilityd. $4 million current liability and a $1 million long- term liability Which of the following is not a reason why a company might prefer to report a liability as long-term rather than current? a. It may cause the firm to appear less risky to investors and creditors. b. It may increase interest rates on borrowing. c. It may cause the company to appear more stable, commanding a higher stock price for new stock listings. d. It may reduce interest rates on borrowing.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 10MC
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Transcribed Image Text:Question:
The current asset section of Sanford & Son, CPA's balance
sheet consists of cash, accounts receivable, investments,
and prepaid expenses. The 2013 balance sheet reported
the following: cash, $110,000; investments, $22,000;
prepaid expenses, $18,000; noncurrent assets, $422,000;
and shareholders' equity, $350,000. The current ratio at the
end of the year was 1.6 and the debt to equity ratio was
0.8.Determine the following 2013 amounts and ratios:a.
Current liabilities.b. The acid-test ratio.c. Accounts
receivable.d. Long-term liabilities. United Supply has a $5
million liability at December 31, 2021, of which $1 million is
payable in each of the next five years. United Supply
reports the liability in the balance sheet as a:
a. $5 million current liabilityb. $5 million long-term liability
c. $1 million current liability and a $4 million long-term
liabilityd. $4 million current liability and a $1 million long-
term liability Which of the following is not a reason why a
company might prefer to report a liability as long-term
rather than current?
a. It may cause the firm to appear less risky to investors
and creditors.
b. It may increase interest rates on borrowing.
c. It may cause the company to appear more stable,
commanding a higher stock price for new stock listings.
d. It may reduce interest rates on borrowing.
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