Accounting Midterm

Current Ratio

Current assets/Current liabilities - Ability to pay short term debts

Gross Profit Percentage

(Gross profit / Net Sales Revenue) x 100 - How much of each sales dollar remains after COGS

Acid Test/Quick Ratio

(Cash + Short term investments + A/R) / Current liabilities - A measure of a company's short-term liquidity that indicates its ability to meet obligations without relying on inventory sales.

Inventory turnover

(COGS / (Beginning Inv + Ending Inv / 2) - How quickly inv is sold

Days Sales in Inventory

365 / Inventory turnover - Average number of days inv is held

A/R Turnover

Net Credit Sales / Average Net A/R - How quickly customers pay

Days in Sales Receivables

365 / AR Turnover - Average number of days customers take to pay

Debt Ratio

Total liabilites / Total Assets x 100 - Percentage of assets financed by debt

Ending inventory overstated

Net income overstated

Beginning inventory overstated

COGS Overstated

Ending inventory understated

Net income understand

Beginning inv understated

COGS Understated

Outstanding Cheques

Cheques that have not been cashed - Subtract from bank balance

Deposit in transit

Add to bank balance

Bank collection of note receivable

Add to book balance

Bank service charge

Subrtract from book bal

NSF Cheques

Subtracted from book side

Interest earned

Added to book side