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Accounting Formulas questions reviewed and verified.
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Accounting Formulas questions reviewed and verified.

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  • August 29, 2024
  • 6
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • accounting formulas questions reviewed and verifie

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  • Accounting 101
  • Accounting 101

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Accounting Formulas questions
reviewed and verified.

Accounting Basic Formula ANS - Assets = Liabilities + Owners' equity ( A = L + OE)



Assets = ANS - Liabilities + Common Stock - Dividends + Revenues - Expenses



1. ASSETS ANS - INCREASE WITH A DEBIT



2. Liabilities ANS - Increase with a Credit



3. Common Stock ANS - Increase with a Credit



4. DIVIDENDS ANS - INCREASE WITH A DEBIT



5. Revenues ANS - Increase with a Credit



6. EXPENSES ANS - INCREASE WITH A DEBIT



INTEREST ANS - Principal x Rate x Time



BALANCE SHEET ANS - Assets, Liabilities, Owners Equity (stock, retained earnings)



INCOME STATEMENT ANS - Revenues, Expenses



RETAINED EARNINGS ANS - Dividends, Retained Earnings

, RETAINED EARNINGS ANS - = Beginning Retained Earnings + Net Income - Dividends



NET INCOME ANS - =Revenues - Expenses



Maturity Value ANS - Principal + Interest



Debt Ratio ANS - = Total Liabilities / Total Assets



Equity Ratio ANS - =Total Equity / Total Assets



PROFIT MARGIN RATIO ANS - = Net Income / Net Sales



GROSS MARGIN RATIO ANS - = Net Sales - Cost of Goods Sold / Net Income



Book value per common share ANS - = Shareholders' equity applicable to common shares

/ Number of common shares outstanding



Basic Earnings Per Share ANS - =Net Income - Preferred Dividends

/ Weighted-average common shares outstanding



Return on Investment (ROI) ANS - ROI = Net Income / Average Total Assets



Working Capital ANS - Working Capital = Current Assets - Current Liabilities



Return on Equity (ROE) ANS - Return on Equity = Net Income / Average Owner's equity



Current & Acid-test Ratio difference ANS - Current Ratio includes Merchandise Inventory whereas Acid-
test ratio does not include

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