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Subject Topic: Liquidity Ratios (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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AccountingNerd8
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Posted: 08 Jun 2009 at 13:06 | IP Logged  

thanks, that helps a lot. it makes a lot more sense when you plug in the numbers.  so how did you feel about the exam?  what review program did you use? were there any questions on the exam that your review did not prepare you for? 

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BEC- July 22, 2009 PASS
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TryingCPA
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Posted: 08 Jun 2009 at 14:51 | IP Logged  

No problem :)

I used the Yaeger home study program for FAR and BEC.  Working on REG now.  I felt the program was excellent preparation, both for FAR and BEC.  For FAR, out of the 90 multiple choice, there were probably only 5 or 6 where I was like what the ?!$% and had no familiarity with at all, so I guessed on those.  Some of those were probably test questions.  There were some tricky ones where I could narrow it down to two.  And of course, a couple where I had remembered learning the material, but due to exam jitters, couldn't get it.  Time management was my biggest problem with FAR - I felt the simulations were reasonable, nothing obscure.  I just ran out of time on the second one.

BEC was interesting, waiting for my score.  Again, not much that wasn't covered in Yaeger.  There were 3 or 4 where I had no clue, a few where I had a hard time deciding between two, and a lot that weren't necessarily difficult, but were time consuming.  There seems to be a big variation in the BEC exams; mine had a lot of calculations and I was still working on the last couple when I ran out of time.  Had more calcs than FAR!  Others posting say they had very little number crunching and were done in under an hour.

I want my BEC score, the waiting is the hard part...



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amr-abdo
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Posted: 26 Jul 2016 at 09:36 | IP Logged  

TryingCPA wrote:

Hey, we've all been there.  It's easy to get so caught up in studying you start over analyze things. 

Both the current ratio and the quick ratio have CURRENT liabilities in the denominator, so the reduction in the note payable does reduce the note payable, but does not impact the calculation :)

Some #s to make up:

Current Assets (all)      200,000
Cash, Net A/R, MES      125,000

Current Liabilities        & amp; amp; amp; amp; amp; amp; nbsp;   50,000

Say you pay off $10,000 of a long term note

Current ratio before note paid is 4 (200,000/50,000) current ratio is current assets/current liabilities

Quick ratio before note paid is    2.5 (125,000/50,000) quick ratio is cash, net ar, marketable equity securities (a number lesser than TOTAL current assets)

 

After note is paid off

Current ratio 190,000/50,000 3.8

Quick ratio 2.3

Denominator never changes because reduction is note payable is applicable to a long term liability, not a short term liability

current ratio % decrease is 4.0-3.8/4.0 = 5%

quick ratio % decrease is 2.5-2.3/2.5 =    8%, thus a greater impact on the quick ratio

hope this helps :)

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