AFM101 Lecture 2: AFM 101 Fall 2014 In class problems week 2

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Grace Loney

Document Summary

12,000: no journal entry required because no delivery of services has yet occurred. d. 12,000: this transaction occurs between an owner and others, there is no effect on the business due to the separate-entity assumption. = liabilities $ 0 + shareholders" equity $ 84,000. As at june 30 (in thousands of dollars) Current = current assets = ,965 = 5. 19. This ratio suggests that for every in current liabilities, danier leather inc. has . 19 in current assets. Analysis of the current assets indicates that they consist mainly of cash and inventories. The amount of cash alone is about 3 times current liabilities. While this represents a high margin of safety for creditors, it also indicates that the company may not using its cash resources efficiently to generate income for shareholders. The cash basis considers only the cash receipts and cash payments regardless of the revenues generated in march and the related expenses.