Question

You are in the market to buy a new bakery. As part of the process you review the balance sheets of the following two different bakeries:

Bakery A

Assets

Cash on hand: $10,000

Inventory (flour, grain): $5,000

Amount owed by customers: 5,000

Liabilities

Amount owed to suppliers: $10,000

Short-term debt: $10,000

Bakery B

Assets

Cash on hand: $10,000

Fixed assets (equipment): $5,000

Long-term investments: $5,000

Liabilities

Salaries due to employees: $10,000

Amount owed to suppliers: $10,000

Select the statement that best describes the difference between Bakery A and Bakery B from the list below.

a. Bakery B has greater owner equity than bakery A.

b. Bakery A has more current assets than Bakery B.

c. Bakery A has greater owners’ equity than bakery B.

d. Bakery A has more short-term liabilities than Bakery B You are assisting the Chief Financial Officer of your company with distribution of financial reports to an investment analyst at a large pension fund. The analyst is considering whether to add your company to their portfolio. He first wants to view your financial accounting reports. The CFO gives you shared access to a Dropbox folder that contains six reports. Select the three that the investment analyst most likely wants to see first. a. Detailed listing of all long-term company assets b. Company income statement for last three years c. Profit and loss projections for each region for last two years d. Statement of cash flows for last two years e. Detailed report on value of inventory assets f. Balance sheet

Answer 1

The statement that best describes the difference between Bakery A and Bakery B from the list below is :

Answer :

Option b. Bakery A has more current assets than Bakery B.

Explanation

Current asset describes the company's paying ability to payt is liabilities.
Current assets are cash on hand, inventory, receivables etc.

So, Bakery A has :

Cash on hand: $10,000

Fixed assets (equipment): $ 5,000

Total current assets: $15,000

Hence, Bakery A has more current assets than Bakery B.

You are assisting the Chief Financial Officer of your company with distribution of financial reports to an investment analyst at a large pension fund. The analyst is considering whether to add your company to their portfolio. He first wants to view your financial accounting reports. The CFO gives you shared access to a Dropbox folder that contains six reports.

Answer :

The three that the investment analyst most likely wants to see first are :

• Detailed listing of all long-term company assets
• Company income statement for last three years
• Balance sheet.

As these three will provide all the information about the company and its workings.

So, using these investors will decide whether to invest or not.