Concepts; terminology
Listed below are several terms and phrases associated with the balance sheet and nancial disclosures. Pair each item
from List A (by letter) with the item from List B that is most appropriately associated with it.
List A List B
——1. Balance sheet a. Will be satised through the use of current
assets.
——2. Liquidity b. Items expected to be converted to cash or
consumed within
——3. Current assets one year or the operating cycle, whichever is
longer.
——4. Operating cycle c. The statements are presented fairly in
conformity with GAAP.
——5. Current liabilitiesd. An organized array of assets, liabilities, and
equity.
——6. Cash equivalent e. Important to a user in comparing nancial
information across
——7. Intangible asset companies.
——8. Working capital f. Scope limitation or a departure from GAAP. -
——9. Accrued
liabilities
g. Recorded when an expense is incurred but
not yet paid.
——10. Summary of
signicant
h. Relates to the amount of time before an asset
is converted to
accounting policies cash or a liability is paid.
——11. Subsequent
events
i. Occurs after the scal year-end but before the
statements
——12. Unqualied
opinion
are issued.
——13. Qualied
opinion
j. Cash to cash.
k. One-month U. S. Treasury bill.
.l Current assets minus current liabilities.
m. Lacks physical substance.

5. profit maximization and shutting down in the short run suppose that the market for polos is a competitive market. the following graph shows the daily cost curves of a firm operating in this market. 0 2 4 6 8 10 12 14 16 18 20 50 45 40 35 30 25 20 15 10 5 0 price (dollars per polo) quantity (thousands of polos) mc atc avc for each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. assume that if the firm is indifferent between producing and shutting down, it will produce. (hint: you can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) price quantity total revenue fixed cost variable cost profit (dollars per polo) (polos) (dollars) (dollars) (dollars) (dollars) 12.50 135,000 27.50 135,000 45.00 135,000 if the firm shuts down, it must incur its fixed costs (fc) in the short run. in this case, the firm's fixed cost is $135,000 per day. in other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). this firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per polo.