The Following Are the Income Statements of the Franz Company

question 83

Multiple Choice

The following are the income statements of the Franz Company for two consecutive years. Which expense(s) increased substantially as a percentage of sales and thus contributed to the net loss in 2014?

• A) administrative expenses
• B) selling expenses and administrative expenses
• C) cost of goods sold
• D) cost of goods sold and selling expenses

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Definitions:

Preferential Treatment

The act of giving priority or advantage to a particular person or group over others, typically in an unfair manner.

Creditors

Individuals or institutions to whom money is owed.

Bankruptcy Relief

Legal relief obtained through a court proceeding that allows individuals or organizations to eliminate or reorganize their debts.

State Law

Legislation that is enacted by the legislative bodies within each of the states in the United States, as opposed to federal law.