Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. two companies, company a and company b, operate in

Two companies, Company A and Company B, operate in the same industry. Company A ...

60.1K

Verified Solution

Question

Accounting

Two companies, Company A and Company B, operate in the same industry. Company A
reports higher profits than Company B. Upon further analysis, it is discovered that Company
A capitalizes a significant portion of its operating expenses, while Company B spends all
operating expenses immediately. Analyze the implications of these accounting practices on the
financial statements and compare the financial performance of both companies.
Company A
Company B
Revenue
Rs 20,00,000
Revenue
Rs 18,00,000
A Operating Expenses
(after capitalization)
Rs 12,00,000
Operating Expenses
(after capitalization)
Rs 15,00,000
Non-Operating
Expenses
Rs 1,00,000
Non-Operating
Expenses
Rs 80,000
Net Income
Rs 8,00,000
Net Income
Rs 2,20,000
Total Assets
Rs 50,00,000
Total Assets
Rs 45,00,000
Total Liabilities
Rs 20,00,000
Total Liabilities
Rs 18,00,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Explain how smoking alters the anatomy and physiology of the respiratory tract and leads to emphysema.

Finance
1.2K views

2.Assume that the export price of a Toyota Corolla from Osaka, Japan is ¥1,950,000. The exchange...

Accounting
1.2K views

How does one find the earnings to subject tax?

Biology
1.2K views

What is pH level what are its characteristics and how does it contribute to pollution...

Physics
1.2K views

12 In the figure shown if a parallel beam of white light is incident on...

Geometry
1.2K views

Your Turn 1 Solve for x in the parallelogram below 4 PR 16 6x 2...

Basic Math
1.2K views

Use the given information to find the minimum sample size required to estimate anunknown population...

Statistics
1.2K views

Name that variable A survey of a large college class asked the following questions 1...

Accounting
1.2K views

XYZiemas of $200.000 Azn.thews $260.000 Amethit company XYZprato $250,000 in the coming period the changespected...

Accounting
1.2K views

Urban Life Ltd. sponsors a defined benefit pension plan for its employees. It is now...

Accounting
1.2K views

Larned Corporation recorded the following transactions for the just completed month. $73,000 in raw materials...

Finance
1.2K views

12. Church Inc. is presently enjoying relatively high growth because of a surge in the...