Both Company a and Company B Use Accrual Accounting

question 44

Essay

Both Company A and Company B use accrual accounting.Both have $80,000 in sales revenues and $50,000 in expenses for their first month of business.Company A allows cash sales only.Company B sells to its customers on account and as of the end of the month its customers owe $30,000.Show how Company A's and B's four financial statements compare by putting an X under either the Same or Different column for each of the statements.

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Definitions:

Target Markets

The specific group of consumers at whom a company aims its products and services.

Mall of America

A large shopping mall located in Minnesota, USA, known for being one of the largest malls in the country by total area and stores.

Maintained Markup

The difference between the cost of a product and its selling price, kept consistent to achieve a targeted profit margin over time.

Original Markup

The difference between the cost price and the initial selling price set by a retailer for a product.