The Accountant at Intellectual Property Inc

question 119

Essay

The accountant at Intellectual Property Inc.gathered the following selected accounting information:
Required:
a.Compute the acid-test ratio for 2016 and 2017.
b.Compute the days' sales in average receivables for 2016 and 2017.
Net accounts receivable on December 31,2015 was $27,000.

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Definitions:

Physical Flow

The actual movement of goods through a production process or supply chain.

Internal Control

Methods and practices put in place by an organization to guarantee the accuracy of financial and accounting data, encourage responsibility, and inhibit fraudulent activities.

Physical Inventory

The process of counting and verifying the actual quantities of goods in stock at a particular time.

Inventory Cost Formulas

Methods used to determine the cost of inventory sold and ending inventory value, such as FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average cost.