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5 Written questions

5 Matching questions

  1. cash discount
  2. physical control
  3. exchange rate loss
  4. current ratio
  5. multinational corporation
  1. a Multinational corporations have their home in one country but operate and have subsidiaries operating within and under the laws of other countries.
  2. b A decrease in value due to changes in the exchange rate.
  3. c When a good or service is sold on credit, the selling company wishes to collect the cash as soon as possible. To encourage prompt payment, many companies offer cash discounts on the gross sales price. Cash discounts specify that an amount of cash less than the gross sales price is sufficient to satisfy the obligation.
  4. d The process designed to safeguard cash from loss or theft.
  5. e Current assets/Current liabilities. The current ratio is often used to assess a company's current asset management and its solvency position. It is normally an important part of financial statement analysis.

5 Multiple choice questions

  1. Current assets are assets on the balance sheet expected to be converted to cash or expired in one year or the operating cycle, whichever is longer.
  2. A small amount of cash kept on hand to cover minor expenses.
  3. A markdown is a reduction in sales price normally due to decreased demand for an item. Markdowns are very common in the retail industry, especially at the close of the seasons. These discounts are designed to accelerate sales of old items (boosting inventory turnover), making room for new inventories market price The market price is the price at which an asset can be exchanged in the open (output) market as of a particular point in time. See fair market value and stock price.
  4. (Cash + Marketable Securities accounts Receivable)/Current liabilities. The quick ratio compares a company's highly liquid assets to its current liabilities, providing a measure of the portion of the current liabilities that could be paid off in the near future.
  5. Net realizable value is the net cash amount expected from the sale of an item, usually equal to the selling price of the item less the cost to complete and sell it.

5 True/False questions

  1. allowance methodThe allowance method, under generally accepted accounting principles (GAAP) is the preferred method to account for uncollectibles and sales returns, both of which have a direct effect on the reported value of accounts receivable. The allowance method involves estimating the dollar amount of the uncollectibles or sales returns at the end of each accounting period and, based on that estimate, records an entry that reduces both net income and the balance in accounts receivable with a contra account called 'allowance for uncollectibles'.

          

  2. window dressingHedging is a strategy used by management to reduce the risk associated with fluctuations in the values of assets and liabilities.

          

  3. escrowA markdown is a reduction in sales price normally due to decreased demand for an item. Markdowns are very common in the retail industry, especially at the close of the seasons. These discounts are designed to accelerate sales of old items (boosting inventory turnover), making room for new inventories market price The market price is the price at which an asset can be exchanged in the open (output) market as of a particular point in time. See fair market value and stock price.

          

  4. record controlThe process designed to safeguard cash from loss or theft.

          

  5. hedgingHedging is a strategy used by management to reduce the risk associated with fluctuations in the values of assets and liabilities.

          

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