Using Financial Reports: Evaluating the Reliability of a Balance Sheet Frances Sabatier asked a local bank for
Question:
Frances Sabatier asked a local bank for a $50,000 loan to expand her small company. The bank asked Frances to submit a financial statement of the business to supplement the loan application. Frances prepared the following balance sheet.
Required:
The balance sheet has several flaws. However, there is at least one major deficiency. Identify it and explain itssignificance.
Transcribed Image Text:
FS COMPUTING Balance Sheet June 30, 2012 Assets $ 9,000 Cash and investments Inventory Equipment Personal residence (monthly payments, $2,800) Remaining assets 30,000 46,000 300,000 20,000 $405,000 Total assets Liabilities Short-term debt to suppliers Long-term debt on equipment $ 62.000 38,000 Total debt 100,000 Stockholders' Equity 305,000 Total liabilities and stockholders' equity $405,000
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 78% (14 reviews)
The major deficiency in this balance sheet is the inclusion of the o...View the full answer
Answered By
JAPHETH KOGEI
Hi there. I'm here to assist you to score the highest marks on your assignments and homework. My areas of specialisation are:
Auditing, Financial Accounting, Macroeconomics, Monetary-economics, Business-administration, Advanced-accounting, Corporate Finance, Professional-accounting-ethics, Corporate governance, Financial-risk-analysis, Financial-budgeting, Corporate-social-responsibility, Statistics, Business management, logic, Critical thinking,
So, I look forward to helping you solve your academic problem.
I enjoy teaching and tutoring university and high school students. During my free time, I also read books on motivation, leadership, comedy, emotional intelligence, critical thinking, nature, human nature, innovation, persuasion, performance, negotiations, goals, power, time management, wealth, debates, sales, and finance. Additionally, I am a panellist on an FM radio program on Sunday mornings where we discuss current affairs.
I travel three times a year either to the USA, Europe and around Africa.
As a university student in the USA, I enjoyed interacting with people from different cultures and ethnic groups. Together with friends, we travelled widely in the USA and in Europe (UK, France, Denmark, Germany, Turkey, etc).
So, I look forward to tutoring you. I believe that it will be exciting to meet them.
3.00+
2+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Accounting questions
-
Explain procedures that might improve the reliability of a system. How would you increase the availability of a system? Distinguish between a system with components in parallel and another with...
-
Betsey Jordan asked a local bank for a $ 50,000 loan to expand her small company. The bank asked Betsey to submit a financial statement of the business to supplement the loan application. Betsey...
-
The reliability of a hard-disk drive is typically described in terms of a quantity called mean time between failures (MTBF). Although this quantity is called a time, the MTBF actually is measured in...
-
Selected financial data for Petersen Corporations revenue and income (contribution) are reproduced below: Required: a. Use common-size statements to analyze every divisions (1) contribution to total...
-
How does the comparability characteristic affect accounting for inventory?
-
Take 5 class periods to observe the shoe color of individuals in class. Assume the shoe color categories are red, white, black, brown, and other. Complete a frequency table for each color category....
-
In Example 22.4, derive Eqs. (22.6) and (22.7). Then, graph the economic potential as a function of the reactor batch time for various values of the rate constant, \(k\), over the range \(0.4-0.6\)...
-
Consider the following situations: a. Business receives $3,800 on January 1 for 10-month service contract for the period January 1 through October 31. b. Total salaries for all employees is $3,200...
-
A toy gun is pointed toward the sky. A styrofoam ball of mass 30g is at rest against a spring with a spring constant of 4,000N/m that is compressed 2.5cm. The spring is released causing the ball to...
-
Calculate Amys real income in terms of cake. Calculate the relative price of cake in terms of coffee. Amy has $20 a week to spend on coffee and cake. The price of coffee is $4 a cup, and the price of...
-
Broadening Financial Research Skills: Locating Financial Information on the SECs Database The Securities and Exchange Commission (SEC) regulates companies that issue stock on the stock market. It...
-
Using Financial Reports: Analyzing the Balance Sheet Recent balance sheets of Dell, Inc., a leading producer and marketer of a broad range of personal computers, mobility products, software, and...
-
Presented on the next page are selected accounts for Alvarez Company as reported in the worksheet at the end of May 2008. Instructions Complete the worksheet by extending amounts reported in the...
-
What could the Bank of Canada do if the Canadian dollar appreciates too much against the US dollar? Explain.
-
Explore the challenges and benefits of maintaining investment in a subsidiary account using different equity and cost methods. Discuss situations where one method might be preferred over others and...
-
Offering an employee an incentive whenever a department is short staffed to pick up a shift, how does that motivate the employee?
-
Delta Company produces a single product. The cost of producing and selling a single unit of this product at the company s normal activity level of 8 8 , 8 0 0 units per year is: Direct materials $ 1...
-
Some fire departments and hospital staff are using the 3-day, 36-hour schedule. Describe 2 of the positive aspects of implementing long shift work in those industries.
-
Estimate the difference between short-term interest rates in Mexico and the United States on May 26, 2010, from the information in Table 5.4. Table 5.4 Currency futures quotes as reported by...
-
What is a make-or-buy decision?
-
Evaluate each basic elementary function at (A) x = 729 (B) x = 5.25 Round any approximate values to four decimal places.
-
The following information is available for Washington Mills Corp. for 2012. Cash used to purchase treasury stock .............$ 48,100 Cash dividends paid .....................21,800 Cash paid for...
-
The following information is taken from the 2012 general ledger of Mathias Company. InstructionsIn each case, compute the amount that should be reported in the operating activities section of the...
-
You are provided with the following transactions that took place during a recent fiscal year. InstructionsComplete the table, indicating whether each item (1) should be reported as an operating (O)...
-
How are these alliance structures managed and how do these management practices differ from other types of structures? Explain
-
Delph Company uses a job - order costing system with a plantwide predetermined overhead rate based on machine - hours. At the beginning of the year, the company estimated that 5 2 , 0 0 0 machine -...
-
A company's Cash account shows a balance of 3 , 4 5 0 at the end of the month. Comparing the company's Cash account with the monthly bank statement reveals several additional cash transactions such...
Study smarter with the SolutionInn App