A customer’s promise to pay on credit is classified as an account payable by the seller.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

A corporation reported cash of $14,000 and total assets of $178,300 on its balance sheet. Its common-size percent for cash equals:

The higher the accounts receivable turnover, the less quickly accounts receivable are collected.

Refer to the following selected financial information from Elvis Corp. Compute the company’s inventory turnover for Year 2.    Year 2   Year 1   Merchandise inventory 271,000   253,500   Cost of goods sold 486,400   433,100  

The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

When preparing the operating activities section of the statement of cash flows using the indirect method, expenses with no cash outflows are added back to net income.

Risk is the uncertainty about the return we will earn.

Baggins’s net income for the year ended December 31, Year 2 was $185,000. Information from Baggins’s comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.  At December 31 Year 2 Year 1 Common Stock, $5 par value $ 500,000   $ 450,000   Paid-in capital in excess of par   948,000     853,000   Retained earnings   688,000     582,000