Horngren's Accounting, Student Value Edition (12th Edition)

12th Edition

ISBN: 9780134487151

Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura

Publisher: PEARSON

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Textbook Question

Chapter 1, Problem 1.1DC

Decision Case 1-1 Let’s examine a case using Greg's Tunes and Sal's Silly Songs. It is now the end of the first year of operations, and both owners want to know how well each business came out at the end of the year. Neither business kept complete accounting records, and neither owner made any withdrawals. The businesses throw together the data shown below at year-end:

Sal's Silly Songs:
Total Assets	$ 23,000
Owner contribution	8,000
Total Revenues	35,000
Total Expenses	22,000
Greg's Tunes:
Total Liabilities	$ 10,000
Owner contribution	6,000
Total Expenses	44,000
Net Income	9,000

To gain information for evaluating the businesses, the owners ask you several questions. For each answer, you must show your work to convince the owners that you know what you are talking about.
Requirements

Which business has more assets?
Which business owes more to creditors?
Which business has more owner's equity at the end of the year?
Which business brought in more revenue?
Which business is more profitable?
Which of the foregoing questions do you think is most important for evaluating these two businesses? Why?
Which business looks better from a financial standpoint?

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Chapter 1 Solutions

Horngren's Accounting, Student Value Edition (12th Edition)

Ch. 1 - Prob. 1QC Ch. 1 - Which of the following is not an external user of...Ch. 1 - Prob. 3QC Ch. 1 - Prob. 4QC Ch. 1 - Prob. 5QC Ch. 1 - Which of the following requires accounting...Ch. 1 - At the end of a recent year, Global Cleaning...Ch. 1 - Consider the overall effects on Global Cleaning...Ch. 1 - Assume that Global Cleaning Service performed...Ch. 1 - The balance sheet reports the Learning Objective 5...

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