A negative return on equity (ROE) signifies that the company is incurring losses, as it indicates that net income is negative relative to shareholders' equity.

A trial balance ensures that the total debits equal total credits, indicating that the accounts are balanced.

If total debits exceed total credits, it indicates there may be an error in accounting that needs to be investigated.

A trial balance with a debit balance indicates that there are more debits than credits, which may suggest an error in the accounting records.

FIFO stands for First In, First Out, meaning the oldest inventory items are sold first.

The debt to equity ratio indicates the relative proportion of shareholders' equity and debt used to finance a company's assets, reflecting its financial leverage.

The debt-to-equity ratio measures a company's financial leverage by comparing its total liabilities to its shareholders' equity.

The Payback Period measures the time required to recover the initial investment from cash inflows.

The price-to-earnings (P/E) ratio indicates the market's expectations of future earnings based on the current share price relative to earnings per share.

The price-to-earnings (P/E) ratio measures the market valuation of a company relative to its earnings.

Prime cost refers to the sum of direct materials and direct labor costs incurred in production.

If an account is omitted from the trial balance, it will cause the trial balance to be out of balance.

If an error is found, adjusting entries must be made to correct the accounts before finalizing the financial statements.

If an error is found in the trial balance, it must be corrected before proceeding to ensure the accuracy of the financial statements.

When a partner retires, the capital accounts are adjusted for goodwill to reflect the value of the partnership.

The choice of inventory valuation method affects both the balance sheet and income statement, influencing net income and asset values.

The weighted average method averages the cost of all inventory available for sale, providing a middle ground between FIFO and LIFO.

FIFO can lead to inventory obsolescence as older inventory is sold first.

The accounting equation is Assets = Liabilities + Equity.

The accounting equation states that Assets equal Liabilities plus Equity, forming the foundation of double-entry accounting.

Depreciation is deducted from the asset value to reflect the reduction in value over time.

Depreciation is deducted from the asset value in the final accounts.

The distribution of profits is recorded by debiting the profit and loss account and crediting the partners' capital accounts.

The double declining balance method accelerates depreciation by applying a constant rate to the declining book value of the asset.

The double-entry accounting principle states that every transaction affects at least two accounts.

If a cash sale of $500 is recorded incorrectly, it will create a $500 debit excess in the trial balance.

A $500 purchase of inventory increases assets (inventory) and increases liabilities (accounts payable) if not paid in cash.

Depreciation expense reduces net income as it is an expense that is deducted from revenues.

A double entry error will cause an imbalance in the trial balance because it affects the equality of debits and credits.

When a partner withdraws, it typically results in a decrease in total capital as their capital account is settled.