Business analysts were reviewing the sales statistics for two companies with the goal of determining which company would be the best for investment purposes. Company A had annual profits of $1 million a year at its five-year mark with profits increasing annually for five additional years to profits of $1.2 million. Company B had annual profits of $10,000 at its five-year mark, but profits increased annually for five additional years to $100,000 with these numbers climbing annually. Which of the following is most likely in light of these profit figures?
A. Company A has greater access to capital than Company B.
B. Company A has most likely expanded its operations over five years by selling new items or selling in new markets.
C. The leadership of Company B has less status than Company A.
D. Company A has greater sales than Company B.
Answer: B
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Indicate whether the statement is true or false
Which of the following statements is true of accrual basis accounting?
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