Below are summary data for the first two years of operation of an enterprise fund prepared under modified accrual accounting and business (accrual) accounting.

Required
a. For both the modified accrual and accrual accounting data, perform a basic profitability analysis for Year 2 using the "DuPont Analysis" shown below.

b. Which basis of accounting better reflects the profitability of the enterprise fund during Year 2? To what do you attribute the differences?

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Modified Accrual Business Accounting Accounting (in thousands) Year 2 Year 1 Year 2 Year 1 Revenues$1,100 $ Expenditures/Expenses4,000 Total assets... $1,000 3,500 300 500) $1,300 1,000 3,550 2,550 $1,150 900 3,050 2,250 320 (3,400) Return on assets Income Average total assets Return on sales Income Sales Total assets turnover Revenue Average total assets X