How Many of These Are Areas Where There Are Major

question 52

Multiple Choice

How many of these are areas where there are major differences in accounting treatment by sole traders and partnerships and accounting treatment by companies?
Distributions to owners
Accumulation of profits
Accounting for income tax
Accounting for equity
Accounting for GST
Accounting for inventory

• A) 3
• B) 4
• C) 5
• D) 6

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Definitions:

ROE

Return on Equity: It's a financial performance indicator that is computed by dividing the net income by the equity held by shareholders.

Equity/Debt Ratio

An economic indicator revealing the balance between shareholder equity and borrowed funds in financing company assets.

Level 3 Assets

These are financial assets and liabilities that are hard to value because they do not have a readily observable market price, often requiring significant estimation in their valuation.

Fair Value Accounting

An accounting approach where companies measure and report the values of their assets and liabilities on the basis of the actual or estimated fair market prices.