1. Accounting is sometimes described as the language of business. What
is meant by this description?
Accounting can be referred to as the language of business mostly
due to the fact that accounting is ess
7. Explain how each of the following is computed:
a. Price-Earnings Ratio:
The Price to Earnings Ratio is calculated by dividing the earnings
per share for the year from the current stock price. In terms of
its importance, the Price t
1. Why are large corporations often said to be publicly owned?
Large corporations are considered to be publicly owned because of the
composition of the ownership that is in charge of the corporation. Th
1. Coca-Colas distinctive trademark is more valuable to the company than its
bottling plants. But the companys bottling plants are listed in the balance
sheet, and the famous trademark isnt. Explain.
6. Briefly explain the income tax advantage of raising capital by issuing bonds
rather than by selling capital stock.
The main advantage of issuing bonds rather than raising capital by
selling stock in
6. List two items often encountered in reconciling a bank statement that may
cause cash per the bank statement to be larger than the balance of cash
shown in the depositors accounting records.
10.Briefly explain the gross profit method of estimating inventories. In what
types of situations is this technique likely to be useful?
It is a quick and easy technique for estimating the cost of goods
2. Some people think that a companys retained earnings represent cash
reserved for the payment of dividends. Are they correct? Explain.
No they are not correct. Retained earnings is simply the balance o
4. Define the term inventory shrinkage. How is the amount of inventory
shrinkage determined in a business using a perpetual inventory system, and
how is this shrinkage recorded in the accounting records?
Financial Accounting, Chapter 3
4. Does the term debit mean increase and term credit mean decrease? Explain.
No, the terms debit and credit do not mean increase and decrease
respectively. The term debit refers to
1. What is the purpose of making adjusting entries? Your answer should
relate adjusting entries to the goals of accrual accounting.
Adjusting Entries are needed at the end of each accounting
period to m
1. In broad general terms, what is the purpose of accounting?
The purpose of accounting, broadly speaking, is to organize
information in an easy to understand way for whomever may
need the information, w
24 November 2015
Extra Credit Conclusion
This assignment has done a lot for me and taught me a lot more than I could have imagined it
would. As odd as it sounds, it would have been easy to just do the minimum and