.... How to Find Your Subject Study Group & Join ....   .... Find Your Subject Study Group & Join ....  

We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Study Groups By Subject code Wise (Click Below on your university link & Join Your Subject Group)

[ + VU Study Groups Subject Code Wise ]  [ + COMSATS Virtual Campus Study Groups Subject Code Wise ]

Looking For Something at vustudents.ning.com?Search Here

Graded Discussion Board (GDB) # 01.......Financial Statement Analysis (FIN621).....Starting Date Thursday, May 11, 2017 Closing Date Wednesday, May 17, 2017

Graded Discussion Board (GDB) # 01

Financial Statement Analysis (FIN621)

Correct recording of different journal entries and understating the nature of assets, liabilities, cash flows and equity are crucial factors in accounting and challenge for accountants. A minor mistake in understating the nature of an event may distort the overall financial position of the company.

You are required to identify the correct or incorrect statement from below given statements. You must briefly provide true nature of incorrect statements and explain briefly.

  1. If a company has positive income; it means company is solvent.
  2. Changing the accounting method of inventory does not appear in special/extra ordinary items.

Share This With Friends......


How to Find Your Subject Study Group & Join.

Find Your Subject Study Group & Join.

+ Click Here To Join also Our facebook study Group.


This Content Originally Published by a member of VU Students.

+ Prohibited Content On Site + Report a violation + Report an Issue

+ Safety Guidelines for New + Site FAQ & Rules + Safety Matters

+ Important for All Members Take a Look + Online Safety


Views: 412

See Your Saved Posts Timeline

Replies to This Discussion

both are incorrect 

Justify ........

  1. If a company has positive income; it means company is solvent. – False

 

Explanation:

Positive income is one of the factors to measure the company’s ability to meet the interest expenses on its debts which is measured through interest coverage ratio.

Solvency of the company is measured mainly through debt to equity ratio and debt to assets ratio.

 

  1. Changing the accounting method of inventory does not appear in special/extra ordinary items. - True

 

Explanation:

Changing accounting method i.e. from FIFO to weighted average inventory method is a change in accounting policy which requires the retrospective application of the method.

IAS – 8 requires that any change in accounting policy should be retrospectively applied by changing its impact in prior year as well.

1. If a company has positive income; it means company is solvent. – False

Explanation:
Positive income is one of the factors to measure the company’s ability to meet the interest expenses on its debts which is measured through interest coverage ratio.
Solvency of the company is measured mainly through debt to equity ratio and debt to assets ratio.

2.Changing the accounting method of inventory does not appear in special/extra ordinary items. - True

Explanation:
Changing accounting method i.e. from FIFO to weighted average inventory method is a change in accounting policy which requires the retrospective application of the method.
IAS – 8 requires that any change in accounting policy should be retrospectively applied by changing its impact in prior year as well.

Thnx a lot Sir Nazeer Abbasi Sb.............

1st - true because positive income means a company is making profits and able to pay his liabilities that means company is solvent

Current year positive income does not indicate that company is solvent. May be the company have accumulated losses from prior years which is a big indication and raise doubt over the company's solvency.

Solvency of the company is measured mainly through debt to equity ratio and debt to assets ratio not positive income during the year only.

RSS

Forum Categorizes

Job's & Careers (Latest Jobs)

Admissions (Latest Admissons)

Scholarship (Latest Scholarships)

Internship (Latest Internships)

VU Study

Other Universities/Colleges/Schools Help

    ::::::::::: More Categorizes :::::::::::

Member of The Month

1. + ! ! ! ! ϝιƴα ^

Venice, Italy

© 2018   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service