Question

Several years ago, your brother opened Niagara Appliance Repairs. He made a small initial investment and added money from his personal bank account as needed. He withdrew money for living expenses at irregular intervals. As the business grew, he hired an assistant. He is now considering adding more employees, purchasing addi- tional service trucks, and purchasing the building he now rents. To secure funds for the expansion, your brother submitted a loan application to the bank and included the most recent financial statements (shown below) prepared from accounts maintained by a part-time bookkeeper.

Indicate the accounts that might need to be adjusted before an accurate set of finan- cial statements can be prepared. c. Why did the loan officer ask your brother whether he used the accrual basis of accounting for revenues and expenses? Why would it have been important to use this method?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Southern Company owns a building that it leases to others. The building’s fair value is $1,400,000 a...

A: Date Accounts Titles and Explanation Debit Cedit   Cash $140,000     Building ...

Q: Choose the correct. According to the acquisition method of accounting for business combinations, cos...

A: While making merger amount will be paid to attorneys and accountants for the services provided by th...

Q: Preparing a financial budget—budgeted balance sheet Use the following June actual ending balances an...

A: Click to see the answer

Q: Explain the appropriate accounting treatment required when a change is made in the service life or r...

A: Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset due to it...

Q: Describe three alternative linear cost functions.

A: Cost Function: Cost function represents the basic change comes in the total cost due to the change ...

Q: Calculating materials variances Martin, Inc. is a manufacturer of lead crystal glasses. The standard...

A: Material Cost Variance and Material Efficiency Variance: The material cost variance, also called as ...

Q: What are temporary accounts? Are temporary accounts closed in the closing process?

A: Temporary Accounts: A temporary account is an account that is closed at the end of every accounting ...

Q: Q5: Oman Flour mills purchased an equipment and it will be depreciated in such a way that the value ...

A: a. Scrap value of the equipment = OMR 20,000*(0.9)^6                                                ...

Q: The following information is available for Barkley Company at December 31, 2020, regarding its inves...

A: Investment: It refers to the process of using the currently held excess cash to earn profitable retu...