Overview of Financial Accounting | Assignment

Running Head: FINANCE
0
Financial Accounting
(Student Details: )
1/26/2020

FINANCE
1
Financial Accounting
Solution A
In the context of the North West Company Inc. there are non-operating expenses as well as
revenues included in the company’s income statement as follows:
 Non-operating expenses
o Interest expenses for year ended 31st Jan, 2016 and 2015= $6,210 and $6,673
o Income taxes for year ended 31st Jan, 2015= $31,332 and $27,910
 Non-operating revenues
o Total comprehensive income, net of tax for 2016= $16,521
o Total comprehensive income, net of tax for 2015= $-554
In this context, non-operating expenses are the expenses having no relation with the business
of the company (Needles and Powers, 2010). In this way, non-operating expenses are
typically unrelated with the key activities of the business. Both the interest expenses and
income taxes fall into the category of non-operating earnings and expenses (Needles and
Powers, 2010). A non-operating expense is an expense incurred by a business that's unrelated
to its core operations. Hence, the key types of non-operating expenses are related to
amortization, depreciation, interest charges or some other costs of borrowing (Harrison et. al.,
2014).
Solution B
In the context of Sobey Inc and the North West Company Inc, percentage change in sales
revenue is as follows:
1. Percentage change in sales revenue for Sobey Inc.
(24,618-23,928)/ 23,928= 0.029
2. Percentage change in sales revenue for North West Company Inc
(17, 96035 – 16, 24400)/ 23,928= 0.106
Gross profit margin for each of the two companies is as follows:
1. For Sobey Inc.=(Gross profit/Net sales)*100