I’m studying for my Accounting class and don’t understand how to answer this. Can you help me study?
Q2. Explain what is meant by depreciation?
Describe the methods of depreciation and give a numerical example for each method.
PQR Company
XYZ Company
Cash dividend declared and paid during the year
750,000
124,800
Common stock
25,000,000
12,000,000
Number of shares of common stock outstanding
50,000
24,000
Par value of a share
50
50
Market value of a share
60
52
Both the companies belong to same industry. PQR is an old and well-established company where as XYZ is a new company. The historical data shows that the PQR has a stable annual dividend distribution to stockholders.
Required:
Calculate dividend yield ratio of both the companies. Which company would you recommend for investment in shares? Explain with reasons.
Q4. A company’s income statement for 2021 showed the following:
Net income, SR150, 000;
depreciation expense, SR20,000
Changes in current assets and current liabilities:
Accounts receivable decreased SR20, 000
merchandise inventory increased 8,000
accounts payable increased 3,000.
Required: Prepare the operating activity section of the statement of cash flow using the indirect method.
Q5. Why does the management of any companies analyze financial statements? Explain by using the different tools in analyzing financial statement with proper numerical example?
Q6. a) Explain the methods that can estimate bad debt expenses in business. (Give numerical examples)
b.) Differentiate between Accounts receivable and Notes receivable.
c) On 1st of October 2019, XYZ Inc. has sold an equipment for SAR 25,000 to ABC Ltd.by issuing an 8% note receivable for 90 days. Calculate the interest on the note and on what would be the maturity date. Pass Journal entry in the books of the company to record these transactions.
