Question
Assume you have been handed the income statements below for analysis.Study the statements and then answer the questions below. Income Statement - Entity A Revenues
Assume you have been handed the income statements below for analysis.Study the statements and then answer the questions below.
Income Statement - Entity A
Revenues
$1,000,000
Expenses
(400,000)
Gains (losses) that are not extraordinary
(100,000)
Other gains (losses)
20,000
Income from continuing operations
520,000
Gains (losses) from discontinued operations
75,000
Extraordinary gains (losses)
20,000
Cum. effect of changes in accounting principles
10,000
Net income
$625,000
Income Statement - Entity B
Revenues
$1,000,000
Expenses
(800,000)
Gains (losses) that are not extraordinary
0
Other gains (losses)
20,000
Income from continuing operations
180,000
Gains (losses) from discontinued operations
(275,000)
Extraordinary gains (losses)
20,000
Cum. effect of changes in accounting principles
10,000
Net income
$(65,000)
1)What observations would you make in comparing the operations of these two entities?
2)What questions would you have for the management of Entity B?
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Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Jill E. Mitchell
8th Edition
1119791057, 978-1119791058
