Comp Problem Par I and J

Comp Problem Par I and J - is not a bad second year if they...

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Part I: Although Susquehanna Equipment Rentals fell from $200,000 down to only $65,000 in only one month of operation; it is no reason to get worried as to the insolvency of the business. The business is only one month into operations and to start a business the up front cost can be very expensive. Since this is a rental business and they need to buy all the equipment before they can rent it out to earn revenue. With that said the business made a net income of $13,620 in only one month of operation. If this business would have operated an entire year the projected net income would have been over $150,000. Most small business are not projected to make a significant net income in the first 3-4 years but numbers like $150,000
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Unformatted text preview: is not a bad second year if they just maintain what they are already doing. Part J: Since Patty Driver and her husband are the only two partners in this business and they both agree that Patty should continue to handle the accounting than there is nothing unethical about her doing so. However Patty needs to follow adhere to the generally accepted accounting principles when preparing the financial statements to ensure that the business records are as accurate as possible. If she does not feel she can accurately report the company’s worth than they should consider going with a certified public accountant to ensure that the records are accurate and up to date....
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