Imagine you are looking at the balance sheets and income statements of COMPANY A and COMPANY B as well as the ff. background info:

COMPANY A:

- This is a restaurant that sources its ingredients from suppliers within a 50 mile radius and typically makes the payment in 15-20 days.

- They make deliveries using 2 vans (owned by the company) that depreciates over 10 years.

- They only accept cash payments from customers.

- They are a sole proprietorship (no outside investors) and have been able to finance operations solely from sales and the owner's original investment w. the exception of a $50,000 bank loan still outstanding with the bank.

- The co. owns the land and building it operates on and uses it as collateral on the bank loan.

- Due to increased competition, the co.'s expenses exceeded revenue the last fiscal year.

COMPANY B:

- They are planners that sell travel packages.

- All sales are made on account (credit) with a full payment expectation within 30 days.

- They rent long term assets (computers, furniture, etc.).

- They are funded by a group of investors who purchased stock.

- Investors are paid $500 yearly dividend.

- They have office supplies on credit from a supplier store.

- They had a bank loan 5 years ago but already paid it off and has no debt to that bank since.

- Their net profit margin is 37%.

INSTRUCTIONS:

- List 4 differences you will see in financial statements of companies A and B.

- Name the account and document info. that you used to come to your conclusion.