Lets examine a case using Gregs Tunes and Sals Silly Songs. It is now the end of the first year of operations, and both ownersSally Siegman and Greg Moore want to know how well they came out at the end of the year.

Examine both companies selected financial information in the attached file.

Neither business kept complete accounting records and neither owner made any withdrawals. Moore and Siegman throw together the following data at year end: Working in the music business, Moore has forgotten all the accounting he learned in college. Siegman majored in English literature, so she never learned any accounting. To gain information for evaluating their businesses, they ask you several questions. For each answer, you must show your work to convince Moore and Siegman that you know what you are talking about.

Discussion Requirements:

1. Which business has more assets?

2. Which business owes more to creditors?

3. Which business has more owners equity at the end of the year?

4. Which business brought in more revenue?

5. Which business is more profitable?

6. Which of the foregoing questions do you think is most important for evaluating these two businesses? Why?

7. Which business looks better from a financial standpoint?

\begin{tabular}{lr} \hline 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 \\ \hline \end{tabular}