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    Finance/Accounting Problem

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    Which company is better to purchase and why?

    A company B company
    assets 10,000 25,000
    cash 2,000 4,000
    acct rec 50,000 80,000
    equipment 11,000 18,000
    supplies 22,000 34,000
    total assets 95,000 161,000
    liab &equity
    Acct Payable 21,000 38,000
    bank loan 49,000 68,000
    equity 25,000 55,000
    total 95,000 161,000

    other data
    personal withdrawals 40,000 38,000
    owner's investment 16,000 32,000
    capital balance 30,000 12,000

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    https://brainmass.com/business/finance/finance-accounting-fundamentals-20222

    Solution Preview

    Hi there,

    Company A is better for the following reasons:
    1. Their total liabilities are 70K compared to 106K. This means that they will be less encumbered in the future by interest payments and will have more flexibility as far as cash flow is ...

    Solution Summary

    This question involves the fundamentals of accounting. The expert determines what company is better to purchase.

    $2.49

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