Posted by Maria on .
Ok, the case is this.
Six months ago, you closed your business. Now, a person has expressed an interest in acquiring the business. The potential buyer requests a current balance sheet, but you provide her with the one that was prepared just prior to closing.
1) Will the balance sheet be acceptable by the buyer and her accountant?
2) Which GAAP(s) affect this situation? Explain.
Here is my answeres:
1) I think that this balance sheet is obsolutely acceptable, because it shows how this business was doing before closing.
2) I think that this affects The Continuing Concern Concept, because this balance sheet shows that this business will continue to operate.
Is this correct?
Here is the second case:
Martha Higgins is currently trying to borrow some money from the bank. She has listed her personal automobile(25$000) On the business balance sheet to make the statement look more attractive.
1) Is this a resonable this to do? No, this is not a resonable thing to do.
2) Which GAAP(s) affect this situation? This affects The business entity concept. It states that the accounting for business organization and personal affairs must be on a separate balance sheet.
Is this right?