Explanation

Liquidity ratios determine a company's ability to cover short-term obligations and cash flows.

Solvency ratios are concerned with a longer-term ability to pay ongoing debts.

Explanation

The goodwill brought in by an incoming partner in cash is shared by the old partners in their sacrificing ratio.

This ratio reflects the proportion in which the old partners give up part of their profit share to accommodate the new partner.

Explanation

To find the trader's drawings, use the following formula:

Drawings = Opening Capital + Net Profit - Closing Capital

Given:

• Opening Capital = $12,000
• Closing Capital = $13,800
• Net Profit = $3,000

Drawings = $12,000 + $3,000 - $13,800 = $1,200

So, the trader's drawings are $1,200.

Explanation

The current ratio is equal to current assets / current liabilities.

It measures a company's ability to cover its short-term liabilities with its short-term assets.

Explanation

Audit fess is a part of administration overhead.

Administrative overhead is those costs not involved in the development or production of goods or services.

This is essentially all overhead that is not included in manufacturing overhead.

Explanation

In Inventory Turnover calculation, what is taken in the numerator Cost of Goods Sold

In the first option, when determining the inventory turnover,

the numerator used the cost of goods sold,

while the average value of the inventory for the analyzed period serves as a denominator.

Explanation

Direct labor cost is a part of wage-bill or payroll that can be specifically and consistently assigned to or associated with the manufacture of a product, a particular work order, or provision of a service.

Explanation

Explanation

Explanation