Explanation

The P/E ratio compares a company’s stock price to its earnings per share (EPS).

A higher P/E often reflects greater investor expectations for future growth and profitability.

Explanation

Debt-to-equity ratio compares a company's total liabilities to its shareholder equity.

It shows how much debt the company uses to finance its assets relative to equity—key for assessing long-term financial stability.

Explanation

Real Accounts relate to assets like machinery, buildings, or goods—hence, they record dealings in commodities.

These accounts carry balances into the next accounting period.

Explanation

ROE = Net Income ÷ Shareholders’ Equity.

It shows how efficiently a company uses shareholders' funds to generate profit.

Explanation

In accounting, transactions are recorded in the journal on the same day they occur.

This ensures accuracy and timely financial tracking.

Explanation

An oligopoly is a market with few large firms dominating the industry.

These firms often influence prices and market decisions due to limited competition.

A Monopoly exists when there is only one seller in the market.

The product offered has no close substitutes, giving the seller full pricing power.

Explanation

The Quick Ratio (also called acid-test ratio) excludes inventory as it is less liquid.

It focuses on assets that can quickly cover short-term liabilities.

Explanation

The Current Ratio = Current Assets ÷ Current Liabilities.

It evaluates a company’s liquidity and its ability to pay short-term debts.

Explanation

The Income Statement reports a company’s revenues, expenses, and net profit or loss over a specific period.

It reflects the company's operational performance during that time.

Explanation

The Consistency Principle ensures that the same accounting methods are used from period to period.

This helps in comparing financial statements over time for accuracy and reliability.