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Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
Edition 26ISBN: 978-1337498159Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
Edition 26ISBN: 978-1337498159 Exercise 1
Ethics in Action
Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Colleen has told her accountant to provide the bank with a balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year.
In groups of three or four, discuss the following questions:
1. Is Colleen behaving in a professional manner by omitting some of the financial statements
2. a. What types of information about their businesses would owners be willing to provide bankers What types of information would owners not be willing to provide
b. What types of information about a business would bankers want before extending a loan
c. What common interests are shared by bankers and business owners
Colleen Fernandez, president of Rhino Enterprises, applied for a $175,000 loan from First Federal Bank. The bank requested financial statements from Rhino Enterprises as a basis for granting the loan. Colleen has told her accountant to provide the bank with a balance sheet. Colleen has decided to omit the other financial statements because there was a net loss during the past year.
In groups of three or four, discuss the following questions:
1. Is Colleen behaving in a professional manner by omitting some of the financial statements
2. a. What types of information about their businesses would owners be willing to provide bankers What types of information would owners not be willing to provide
b. What types of information about a business would bankers want before extending a loan
c. What common interests are shared by bankers and business owners
Explanation
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Verified
Accounting equation:
Accounting equation refers total assets equals to total liabilities and total stock holders' equity that is, increase in assets results to decrease in assets or corresponding increase in liabilities or stock holders' equity to match the same. The relationship can be understood by the following formula.
1.No, C is not carrying on a professional manner, by omitting portion of the financial statements. It is professional misconduct and dishonesty practice. She is misguiding the bank by not unveiling all related financial statement.
2.a.The owner's will be willing to provide all favorable information, which can influence the bank's choice to authorize the loan.
Information which is terrible financial status of the company is given to the bank.
b.Bank will take chance to get all critical information of the business, which can influence the bank's choice to sanction the loan. This information may incorporate the company's financial statement and past financial data to check credit standing and worthiness.
c.Common interests shared by the business owner and bank are that loan is sanctioned in time and the repayment is made as per give time period and net growth to the both.
Accounting equation refers total assets equals to total liabilities and total stock holders' equity that is, increase in assets results to decrease in assets or corresponding increase in liabilities or stock holders' equity to match the same. The relationship can be understood by the following formula.
1.No, C is not carrying on a professional manner, by omitting portion of the financial statements. It is professional misconduct and dishonesty practice. She is misguiding the bank by not unveiling all related financial statement.2.a.The owner's will be willing to provide all favorable information, which can influence the bank's choice to authorize the loan.
Information which is terrible financial status of the company is given to the bank.
b.Bank will take chance to get all critical information of the business, which can influence the bank's choice to sanction the loan. This information may incorporate the company's financial statement and past financial data to check credit standing and worthiness.
c.Common interests shared by the business owner and bank are that loan is sanctioned in time and the repayment is made as per give time period and net growth to the both.
Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac
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