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Direct materials cost is a fixed cost because it always occurs in a production process.
In order to use a process costing system, products produced should be homogenous in
nature.
The price/earnings (P/E) ratio is an indication of investor confidence in a company.
Accounting for a partnership comes closer to accounting for a corporation than to
accounting for a sole proprietorship.
Under the perpetual inventory system, when merchandise is sold, its cost is transferred
from the Merchandise Inventory account to the Sales account.
The debt to equity ratio is a measure of financial leverage.
The company's minimum rate of return is also referred to as its profit margin.
During the closing process, revenues are transferred to the debit side of the Income
Summary account.
Predetermined overhead costs are the same as actual costs.
Cost of goods manufactured appears on the income statement of a manufacturing
company in a similar manner as purchases appear on the income statement of a
merchandising company.
Disclosure of segment information is useful in the analysis of diversified companies.
