AC114 Unit 6 Discussion Usage of Financial Statements in Business Decisions
Throughout this course, many discussion opportunities come up where you need to respond to other people’s opinions and comments. Address the Discussion topic after you have completed your reading.
Topic 1: Usage of Financial Statements in Business Decisions
Assume that you recently accepted a position with Stockman National Bank as an assistant loan officer. As one of your first duties, you have the responsibility of evaluating a loan request for $90,000 from Goldworks.com, a small proprietorship. In support of the loan application, Yolanda Tovar, owner, submitted a trial balance for the first year of operations ended March 31, 2010.
Use the trial balance to answer the questions.
- Explain to Yolanda Tovar why a set of financial statements (income statement, statement of owner’s equity, and balance sheet) would be useful to you in evaluating the loan request.
- In discussing the Trial Balance with Yolanda Tovar, you discovered that the accounts had not been adjusted at March 31. Analyze the Trial Balance and indicate possible adjusting entries that might be necessary before an accurate set of financial statements could be prepared.
- Assuming that an accurate set of financial statements will be submitted by Yolanda Tovar in a few days, what other considerations or information would be required before making a decision on a loan request?
- You noted that Goldworks.com’s trial balance is prepared through March 31, 2010. Why would the business close out its year on this date? What factors could influence this selection?
AC114 Unit 6 Discussion Usage of Financial Statements in Business Decisions Answer
Hello Professor and Class,
I believe that Ms. Tovar should provide a full set of financial statements including an income statement, owner’s equity statement, and a balance sheet. These statements help give a much better understanding of her business’s financial health and stability. A fiscal year-end set of statements showing revenues expenses and net income would be helpful to know how much she could afford monthly for the loan. An owner’s equity statement would help show the value of the company and how much she has personally invested in the company. This information would be very beneficial in helping Ms……….
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