Chapter 10, Problem 10.2CACR

To determine

Financial statements

Financial statements provide the financial data’s like assets, liabilities, revenues and expenses of any organizations to its internal and external users. There are four basic financial statements, they are:

• Income statement
• Retained earnings statement
• Balance sheet, and
• Statement of cash flows

Liquidity ratio

Liquidity ratio measures the short-term capacity of a company to pay its maturing obligations and to meet unanticipated requirements for cash. Liquidity ratios are current ratio, working capital ratio, acid test ratio and more.

(a)

To prepare: The revised revised balance sheets for "E Company" and "W Company".

(b)

To determine

To prepare: A brief report to the client.