
Concept explainers
Financial statements: Financial statement of a company includes statement of assets and liabilities, income and expenses, notes to accounts, ratios,
Case 1: NC. Co.
(a)
To evaluate: To evaluate the company’s liquidity by calculating and analyzing working capital and the
(b)
To comment: To comment on management’s statement, and to give remedy to the situation.
Case 2: M. Company
(a)
To distinguish: To differentiate between the cash basis and the accrual basis of accounting for warranty costs.
(b)
To determine under what circumstance, if any, would it be appropriate for M. Company to recognize deferred revenue on warranty contracts.
(c)
To determine how would the company recognize the deferred revenue on warranty contracts in subsequent periods.
Case 3: BOP Clothing Co.
(a)
To determine how the operating cycle data relate to the amount of working capital and the current and acid-test ratios.
(b)
To compute: To compute turnover ratios.

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Chapter 13 Solutions
EBK INTERMEDIATE ACCOUNTING, VOLUME 2 S
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