Concept explainers
(a)(1)
Earnings per Share: It is a mandatory term to be reported with the financials of a company in the annual report. It reflects the amount earned or lost on each outstanding common equity share. It is widely used to evaluate the performance of a business.
Price/Earnings Ratio: It depicts the relation of market price of a share to earnings per share of that company. The price/earnings ratio presents the market value of the amount invested to earn $1 by a company. It is major tool to be used by investors before the decisions related to investments in a company.
To determine: The percentage increase (decrease) in (i) net sales and (ii) net income
(a) (2)
The percentage increase in (i) total assets and (ii) total common stockholders’ equity from 2012 to 2013.
(a) (3)
To compute: The earnings per share and price-earnings ratio for 2013.
(b)
To analyze: The ratios and increase (decrease) computed in part (a).

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Chapter 18 Solutions
ACCOUNTING PRINCIPLES
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- No ai Depreciation Expense is shown on the income statement in order to achieve accounting's matching principle. True Falsearrow_forwardno aiOne company might depreciate a new computer over three years while another company might depreciate the same model computer over five years...and both companies are right. True Falsearrow_forwardno ai An asset's useful life is the same as its physical life? True Falsearrow_forward
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