Income Statement Classifications Simon Hardware and Garfunkel Foods Are Sole Proprietorships with Similar

question 95

Essay

Income statement classifications
Simon Hardware and Garfunkel Foods are sole proprietorships with similar amounts of total assets.Also,both businesses earn similar amounts of revenue,incur similar amounts of operating expenses,and report similar net incomes.However,Simon has a higher cost of goods sold,while Garfunkel Foods has higher interest expense.
Indicate which of these companies has the higher (a)gross profit rate,and (b)return on assets.In each case,explain the reasons for each answer.

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Definitions:

Postdated Checks

Checks written with a future date, implying they cannot be cashed or deposited until that date arrives.

Insufficient Funds

A situation where one's bank account does not have enough money to cover checks or electronic transfers made against it, potentially resulting in a bounced check or declined transactions.

Drawer's Account

In financial terms, the account belonging to the person who writes a check or draft instructing a bank to pay a designated amount of money.

Honor The Check

The act of a bank or financial institution completing the transaction by paying the amount specified on a check from the payer's account to the payee or holder.