AC 112 Financial Statements in Business Decisions Questions I am in need of help with a few questions I have for assignment regarding the usage of financia

AC 112 Financial Statements in Business Decisions Questions I am in need of help with a few questions I have for assignment regarding the usage of financial statements in business decisions. I have attached the financial statements and questions in the document below. If you have any further questions could you please let me know. 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.
Questions
Why do we need a set of financial statements to evaluate the loan request? (Hints: A. What’s likely the
very first thing that the bank will look at, often known as “the bottom line?” B. What’s one category of
items on the balance sheet that the bank will need to see to evaluate whether the business is likely to be
able to handle the loan?)
2. What adjusting journal entries might we need to do to make her financial statements accurate? (Hint:
What’s one adjusting journal entry that they need to do that might make the financial statements look
worse to us? Make sure you show the journal entry itself rather than listing accounts.)
3. What other considerations or information might we require before making a decision on whether to
make the loan? (Hint: What else might we check besides the company’s financial statements?)
4. Why might a business run its fiscal year from April 1 through March 31?

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