Exam 3 Study Guide

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Exam 3 Study Guide

Overview of balance sheet and statement of cash flows.

Study Guide
University of Alabama
Ac 310 - Finan Report Analy Bus Activ I
Finan Report Analy Bus Activ I Documents

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AC 310 7th Edition Exam # 2 Study Guide Lectures: 8 - 11 Lecture 8 (February 3) Balance Sheet: Statements tell a story about the company Current Assets: will be converted to cash or consumed within one year or the operating cycle  Cash/Cash Equivalents  Short-term investments  Receivables/Inventories/Prepaid Expenses **The correct order to present current assets is Cash, Marketable (trading) securities, accounts receivable, inventories, prepaid items Noncurrent Assets: not expected to be converted to cash/consumed within one year  Investments (bonds, stock, note receivable = securities) o Land held for speculation: fixed asset o Sinking fund, pension fund, cash surrender value  Cash these aside to meet long-term obligations  Cash surrender value: buy life insurance policies for key executives, part of monthly premium goes here; no access until he dies or leaves the company  PPE (Land held for speculation)/Intangible Assets Current Liabilities: obligations that will not be satisfied within one year or the operating cycle  Accounts Payable/Notes Payable  Accrued Liabilities/Unearned Revenues  Current Maturities of long-term debt Long-Term Liabilities: obligations that will not be satisfied within one year  Long-term notes/long-term bonds  Mortgages  Pension obligations/lease obligations Shareholder’s Equity:  Capital Stock  Additional Paid-In Capital  Retained Earnings  Accumulated Other Comprehensive Income Every item on the Balance Sheet IS a result of a past transaction. Balances sheet shows generating cash flows and assesses the ability to pay current obligations.

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