1.
Financial statement analysis:
Company and its users use financial analysis as a way to analyse the company’s financial statements to take investment and business decisions. There are four financial statements that any company should produce to its users for analysis. These are income statement, balance sheet,
To prepare: Report regarding the information required to provide loan.
2.
Financial statement analysis:
Company and its users use financial analysis as a way to analyse the company’s financial statements to take investment and business decisions. There are four financial statements that any company should produce to its users for analysis. These are income statement, balance sheet, cash flow statement and stockholders’ equity statement.
To discuss: Whether the type of organization affects the request for loan.
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FINANCIAL ACCOUNTING FUNDAMENTALS W/ CO
- Identify whether the following group of people belongs to internal or external users ofannual reports for a company. Eexplain their need for financial information.a. Johari, investment banker of CIMB Investment Bank.b. Daisy Ong, purchasing manager of the company. c. Happy Berhad, supplier of the company. d. Great Sdn Bhd, regular customer of the company.e. Amy, officer from Inland Revenue Board.arrow_forwardThe Pizza and Coffee Company is owned and operated by Patty Patterson who commenced the business eight years ago. The company is now faced with financial challenges and is therefore in need of financial assistance from Ready Cash a local bank. You and your group members are the accounting associates supporting the credit request to Ready Cash and they are requesting a full set of financial statements to ensure that granting the loan would be financially feasible. Your head of finance has furnished you with the latest trial balance for The Pizza and Coffee Company, along with other information relevant to the year under review and you are tasked to prepare the documents requested by Ready Cash. Below is the trial balance which was extracted from the books of the business on December 31, 2020, the end of the company’s financial year. As a group, you are required to collaborate and analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s…arrow_forwardThe Pizza and Coffee Company is owned and operated by Patty Patterson who commenced the business eight years ago. The company is now faced with financial challenges and is therefore in need of financial assistance from Ready Cash a local bank. You and your group members are the accounting associates supporting the credit request to Ready Cash and they are requesting a full set of financial statements to ensure that granting the loan would be financially feasible. Your head of finance has furnished you with the latest trial balance for The Pizza and Coffee Company, along with other information relevant to the year under review and you are tasked to prepare the documents requested by Ready Cash. Below is the trial balance which was extracted from the books of the business on December 31, 2020, the end of the company’s financial year. As a group, you are required to collaborate and analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s…arrow_forward
- The Pizza and Coffee Company is owned and operated by Patty Patterson who commenced the business eight years ago. The company is now faced with financial challenges and is therefore in need of financial assistance from Ready Cash a local bank. You and your group members are the accounting associates supporting the credit request to Ready Cash and they are requesting a full set of financial statements to ensure that granting the loan would be financially feasible. Your head of finance has furnished you with the latest trial balance for The Pizza and Coffee Company, along with other information relevant to the year under review and you are tasked to prepare the documents requested by Ready Cash. Below is the trial balance which was extracted from the books of the business on December 31, 2020, the end of the company’s financial year. As a group, you are required to collaborate and analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s…arrow_forwardDescription and Instructions Suppose you are a part of a group of students from a prominent university and were sent out as a team to work with a leading merchandizing company as a part of a work experience program. The team having been introduced to the general manger was told that the Accountant who normally prepares the financial statements has suddenly resigned and there is no one available to prepare the company’s financial statements which are now due. As aspiring university students, you and your group members have expressed an interest in taking on the task. As a group, you are required to collaborate and analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s financial statements. The problem to be resolved: The following trial balance was extracted from the books of Scholes Farm Ltd December 31, the end of the company’s financial year. The company is owned by Paul Scholes and is in the business of buying and farming…arrow_forwardThe Pizza and Coffee Company is owned and operated by Patty Patterson who commenced the business eight years ago. The company is now faced with financial challenges and is therefore in need of financial assistance from Ready Cash a local bank. You and your group members are the accounting associates supporting the credit request to Ready Cash and they are requesting a full set of financial statements to ensure that granting the loan would be financially feasible. Yourhead of finance has furnished you with the latest trial balance for The Pizza and Coffee The company, along with other information relevant to the year under review and you are tasked to prepare the documents requested by Ready Cash. Below is the trial balance which was extracted from the books of the business on December 31, 2020, the end of the company’s financial year. you are required to collaborate and analyse the problem at hand then apply the accrual basis of accounting in the preparation of the company’s financial…arrow_forward
- Do the following events represent business transactions?Explain your answer in each case.(a) A computer is purchased on account.(b) A customer returns merchandise and is given crediton account.(c) A prospective employee is interviewed.(d) The owner of the business withdraws cash from thebusiness for personal use.(e) Merchandise is ordered for delivery next montharrow_forwardRead the instructions below and see the attached balance sheet of moon and star cooperation to support your answer. Moon Corporation and Star Corporation are in the same line of business and both were recently organized, so it may be assumed that the recorded costs for assets are close to current market values. The balance sheets for the two companies are as follows at July 31, 2011: Instructions a. Assume that you are a banker and that each company has applied to you for a 90-day loan of $12,000. Which would you consider to be the more favorable prospect? Explain your answer fully. b. Assume that you are an investor considering purchasing all the capital stock of one or both of the companies. For which business would you be willing to pay the higher price? Do you see any indication of a financial crisis that you might face shortly after buying either company? Explain your answer fully. (For either decision, additional information would be useful, but you are to reach your decision on…arrow_forwardThis year you obtain a new client, Lee Corporation, a regional distributor of appliances. Before becoming your client, Lee had installed a microcomputer-based accounting system to handle its receivable, payables general ledger and payroll. Lee purchases its microcomputer with off-the-shelf software and appears very pleased with it. You notice that the computer sits on the bookkeeper’s desk. You ask Christian Lee, the president, about his feelings about the computer system, and he states: “The system is absolutely great. It has already saved us a lot of time and money. I get reports when I want them, not days later. In fact, it is so good, why don’t you try it? The password is LEE. You can go ahead and use it. If you want any backup files, they are stored in the supply room. We sure saved a lot of money by purchasing the system from a mail-order operation. A system analyst wanted P15,000 to help pick the best system for us, and a local dealer wanted P11,000 more for comparable…arrow_forward
- This year you obtain a new client, Lee Corporation, a regional distributor of appliances. Before becoming your client, Lee had installed a microcomputer-based accounting system to handle its receivable, payables general ledger and payroll. Lee purchases its microcomputer with off-the-shelf software and appears very pleased with it. You notice that the computer sits on the bookkeeper’s desk. You ask Christian Lee, the president, about his feelings about the computer system, and he states:“The system is absolutely great. It has already saved us a lot of time and money. I get reports when I want them, not days later. In fact, it is so good, why don’t you try it? The password is LEE. You can go ahead and use it. If you want any backup files, they are stored in the supply room. We sure saved a lot of money by purchasing the system from a mail-order operation. A system analyst wanted P15,000 to help pick the best system for us, and a local dealer wanted P11,000 more for comparable hardware…arrow_forwardReal Life Situation: You are a company owner and you decide to sell your own personal computer to your own business for $1,200. From now on, that computer will be used only for business purposes. How would you record the related transactions regarding the above decision in your company accounting books?arrow_forwardAs the bookkeeper of a new start-up company, you are responsible for keeping the chart of accounts up to date. At the end of each year, you analyze the accounts to verify that each account should be active for accumulation of costs, revenues, and expenses. In July, the accounts payable clerk has asked you to open an account named New Expenses. You know that an account name should be specific and well defined. You feel that the A/P clerk might want to charge some expenses to that account that would not be appropriate. Why do you think the A/P clerk needs this New Expenses account? Who needs to know this information and what action should you consider?arrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning