Answer:
Part 1.
3.1 times
Part 2.
a. total assets
Part 3
d. the company's ability to generate sufficient cash to repay debt when due.
Explanation:
<u>For Part 1</u>
Inventory turnover measures the activity of liquidity of a company`s inventory. The higher the ratio in comparison, the more efficient the inventory is managed.
<em>Inventory turnover = Cost of Sales ÷ Inventory</em>
therefore,
Inventory turnover = $982,500 ÷ $ 312,500 = 3.1 times
<u>For Part 2</u>
In a common-size Balance Sheet, each item is expressed as a percentage of total assets whereas in a common size Income Statement, Sales revenue is expressed as 100 % and every other item is expressed as a percentage of sales revenue.
<u>For Part 3</u>
Solvency or Liquidity is the ability of short term assets to cover short term liabilities. Also put, it is the company's ability to generate sufficient cash to repay debt when due.
Answer:
The answers are:
A) Consulting revenue should be listed below the debited account as it is credited.
C) Accounts payable is not involved in this transaction.
D) The Consulting revenue account should be indented, as it is credited.
E) The correct account that should be debited is the Accounts receivable account.
Explanation:
A fair value option is the alternative for a business to record its financial instruments at the fair values. Liabilities are company's financial debts or obligations that arise in the course of business operations. They may be long term or short term. In this case, if the fair value of the liability decreases, the firm should respond by crediting the unrealized Holding Gain/loss in the income account.
