Users of financial information; the accounting profession, types of business organizations, and preparing the financial statements [15-20 min]
Evan O’Brien, Inc., publishes a travel magazine. In need of cash, the business applies for a loan with National Bank. The bank requires borrowers to submit financial statements. With little knowledge of accounting, Evan O’Brien, the sole shareholder, does not know how to proceed.
1. Explain how to prepare the balance sheet and the income statement.
2. Which organization is the privately funded body of accountants that defines pronouncements that guide how the financial statements will be prepared?
3. Indicate why a lender would require this information.
4. What type of organization is Evan O’Brien, Inc.?
5. If Evan wanted to attract outside investors, which form of business would best enable that option?
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