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JAIIB AFM MARATHON 1
What is the fundamental accounting equation?
Assets = Liabilities + Capital (Owner's Equity). This equation forms the basis of double-entry bookkeeping and must always remain balanced.
What is the Return on Equity (ROE) ratio and what does it measure?
Net profit divided by shareholders equity; measures profitability for owners.
What does the term 'going concern' assumption mean in accounting?
It assumes that the business will continue to operate indefinitely and is not likely to be liquidated in the near future, allowing assets to be recorded at cost rather than liquidation value.
What is the Earnings Per Share (EPS) formula?
Net profit after tax divided by number of equity shares outstanding.
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