Baker's Pride BakeryCondensed data from the company's 2019 and 2018 financial statements are presented below. The figures are expressed in thousands.

Question

Statement A2019
2018
Assets:    Total current assets$219,560
$198,088
  Property, plant & equipment (net of accumulated depreciation)18,320
13,996
  Investments3,370
1,167
  Other assets   12,220
   11,667
 Total assets$253,470
$224,918
Liabilities:    Total current liabilities$  92,990
$  95,260
  Long-term debt   15,160
   22,172
 Total liabilities$108,150
$117,432
Stockholders' equity:    Contributed capital$  53,680
$  35,475
  Retained Earnings   91,640
    72,011
 Total stockholders' equity$145,320
$ 107,486
          Total liabilities & stockholders' equity$253,470
$224,918
?
Statement B2019
2018
Net Sales$229,301
$203,171
Cost of sales  135,453
   131,212
Gross margin$93,848
$71,959
Selling, general and administrative expenses64,832
57,442
Other income (expense)        693
       (130)
Income (loss) before income taxes$29,709
$14,387
Income tax expense     3,534
      2,320
Net income (loss)$  26,175
$  12,067
Refer to Baker's Pride Bakery. Based on the information provided, is the company considered a business or non-business entity? How do you know by examining the financial statements?

What will be an ideal response?

Answer 1

This company is a business entity, because its purpose is to make a profit, not simply provide a service or product. Non-business entities have no owners but this company has owners, as evidenced by examining the stockholders' equity section of the balance sheet.