Chapter1 Exercises

Chapter1 Exercises - Tricia Langowski E2 1 How are expenses...

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Tricia Langowski E2 1. How are expenses and dividends similar, and how are they different? Expenses are decreases in stockholders’ equity that results from operating a business, while dividends are increases paid to the stockholders as a reward when the company has been profitable. 2. In what ways are CVS and Southwest Airlines comparable? Not comparable ? Both are corporations that are in business to make a profit and provide liquid cash. CVS sells goods (ie; products and has inventory) while Southwest airlines sells services. 3. How do generally accepted accounting practices (GAAP) differ from the laws of science ? These rules and procedures are based on theory and practice of accounting at a particular time and can evolve to meet current needs and change in different circumstances or develop as better methods are revealed. They differ from the laws of science which are unchanging laws of nature in chemistry or physics. 4.
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