Two manufacturing business entities (A and B)were created at the same time this year and started operating on the very same day.They operate on two absolutely identical but separate worlds,but are not in competition with one another.They are absolutely identical in terms of their market success,their productive technology,equipment and infrastructure.They have the same headcount comprising the same categories of skills and competence.Both must pay cash for all their purchases.
The first year's income statements for each firm are as follows:
Which of the following statements is entirely true:

A) Firm A uses straight line depreciation and has a larger shareholders' equity than B which uses accelerated depreciation
B) Firm A could invest more in R&D than firm B and has more debt than B does
C) Firm A uses accelerated depreciation while firm B uses straight-line depreciation
D) Firm A has less debt than firm B and has more efficient productive equipment

Question

Two manufacturing business entities (A and B)were created at the same time this year and started operating on the very same day.They operate on two absolutely identical but separate worlds,but are not in competition with one another.They are absolutely identical in terms of their market success,their productive technology,equipment and infrastructure.They have the same headcount comprising the same categories of skills and competence.Both must pay cash for all their purchases.
The first year's income statements for each firm are as follows:
Which of the following statements is entirely true:

A) Firm A uses straight line depreciation and has a larger shareholders' equity than B which uses accelerated depreciation 
B) Firm A could invest more in R&D than firm B and has more debt than B does 
C) Firm A uses accelerated depreciation while firm B uses straight-line depreciation 
D) Firm A has less debt than firm B and has more efficient productive equipment

Quizplus · Accepted Answer

The Answer of Two manufacturing business entities (A and B)were created at the same time this year and started operating on the very same day.They operate on two absolutely identical but separate worlds,but are not in competition with one another.They are absolutely identical in terms of their market success,their productive technology,equipment and infrastructure.They have the same headcount comprising the same categories of skills and competence.Both must pay cash for all their purchases.
The first year's income statements for each firm are as follows:
Which of the following statements is entirely true:

A) Firm A uses straight line depreciation and has a larger shareholders' equity than B which uses accelerated depreciation 
B) Firm A could invest more in R&D than firm B and has more debt than B does 
C) Firm A uses accelerated depreciation while firm B uses straight-line depreciation 
D) Firm A has less debt than firm B and has more efficient productive equipment

Two Manufacturing Business Entities (A and B)were Created at the Same