Which of the Following Is the Formula for Computing the Price-Earnings

question 29

Multiple Choice

Which of the following is the formula for computing the price-earnings ratio?

• A)Annual dividend per share of common stock/ market price per share
• B)Market price per share of common stock/ earnings per share
• C)(Net income- preferred dividends)/ number of shares of outstanding common stock
• D)Total stockholder's equity/ number of shares of outstanding common stock

Understand the relationship between transactions, journal entries, and their impact on the financial statements.

Recognize the importance of source documents in the accounting process.

Describe the link between major financial statements: income statement, balance sheet, and statement of owner's equity.

Explain the role of accounting in the measurement, analysis, and reporting of financial performance and position.

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Definitions:

Inventory On Hand

Refers to the total amount of items or products available in stock by a business at any given time.

Debit Memo

A document issued by a buyer to a seller indicating a reduction of the amount due to the seller, often due to returned goods or discrepancy in billing.

Price Allowance

A reduction in the selling price, often used as a promotional strategy or to compensate for minor defects.

Returns Of Merchandise

The process of customers returning previously purchased merchandise back to the seller, typically due to defects or dissatisfaction.