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Financial Accounting
Unit 1 Business and the Role of Accounting
A.) D.C. Dawg starts his own business and contributes $6000.00
This shows in the statement of cash flows and it shows in the owner equity in looking at
total assets D.C. has a ratio of 3:1 dollars invested over his liabilities. For every dollar
borrowed he has put up three of his own dollars. As a lender I would see this as a positive.
B.) The Cats and Dogs Company borrowed $2000.00 from the bank on March 1. This is a
1-year, 12% note, with both principal and interest to be repaid on February 28 of the next
year.
This shows in the balance sheet under liabilities. I think it a positive that this is first a small
loan, and second that The Cats and Dogs Company has made $900.00 in revenue in its first
month. I dont see why this loan cant be paid off on time, if not before it due.
C.) The company earned $900.00 in revenue.
This shows in accounts receivable and is an asset. Revenue is good, but a more aggressive
business plan should be created in order to recoup the owner initial investment and the
payback of the loan.
D.) Expenses amounted to $650.00.
This would show in liabilities under expenses, but as it was non-specific I cant be more
informative. If I was there accountant I would ask for specific information in order to
