Transcript • Question: As you read the balance sheet from top to bottom, what is happening to the liquidity of the assets? • Question:

• Question: As you read the balance sheet from
top to bottom, what is happening to the
liquidity of the assets?
• Question: The inventory will be listed on the
balance sheet under which category?
• Question: When raw material is finally
produced into a product to be sold, what
category is it listed under?
• Question: What is the change in the equity
section of the balance sheet when a firm
reduces its accounts payable balance by using
cash?
• Question: If a bond the company issued
matures between six and 12 months from
today, how is the firm is required to list this?
• Question: Using the Accounting equation,
how would you calculate liabilities given only
the balances for total assets and total equity?
• Question: If the balance sheet lists liabilities as
$5 million and shareholders equity as $8
million, what is the book value of the assets?
• Question: The firm's net fixed assets are listed
as zero, does this mean there are no property,
plant or equipment? Explain.
• A firm purchases Equipment costing $20,000.
They received a really good deal on this
equipment which normally would have cost
them $30,000. They have decided the useful
life of the equipment is 4 years. Calculate the
balance in the accumulated depreciation
account at the end of the second year of use.
• A firm purchases Equipment costing $20,000.
They received a really good deal on this
equipment which normally would have cost
them $30,000. They have decided the useful
life of the equipment is 4 years. Calculate the
book value of the equipment at the end of the
second year of use.
• A company borrows $12,000 at 12%. The
fixed payment each month is $300. Calculate
the interest expense and the principal paydown in the second payment.
• A company leases a piece of equipment. The
cost of the equipment is $100,000 and has a
useful life of 8 years. The lease lasts for 5
years, the company may buy the equipment at
fair market value at the end of the lease and
the total value of the principal payments on
the lease equals $80,000. Is this a capital
lease or an operating lease and why?