Explain briefly why creditors are interested in the financial statements of a business?
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Creditors use the information in a financial statement to gage the credit worthiness of a business. A financial statement will tell how much money is coming in, how much money is going out and if the business has any assets. A potential investor would look at the same information. A creditor would want to know if there were potential investors and what their credit worthiness is. Labor unions seldom come in to play when it comes to looking at a financial statement. As a rule, unions are considered to be a liability.
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They want to see 2003 and 2005 to see continuity of operations.\n\nFirst tell the auditor that you do not have all your receipts and why you do not have them.\n\nTry to legally recreate them.  For example you purchased a typewriter for your business.  Get the instruction manual and warranty card for it, find a office supply cataloge that shows what the purchse price would have been then.   Get what ever support you can to justify your deductions.  Look at your credit card statements (get copies if you have to or download them).  If you went to a seminar in Miami call them and have them fax you a statement saying you were there and what the dates were, same with the hotel where you stayed.  Get the software books and boxes to prove you purchased them.\n\nOnce the auditor starts looking at your return he will narrow in on only a couple of areas.  You did not say what type of Schedule C you did but the usual places they go are Entertainment Expense and Travel Expense.  \n\nThe one thing he will do is ask you for all your bank statements.  I mean ALL of them(personal and business accounts).  Have them for him.  If you do not have them now call the bank to get copies, or download them off the net.  \n\nWhat he will do with the bank statements is add up all of the deposits that went into every account, subtract from this transfers that came from other accounts.  This is the income that you should have reported as Gross Receipts on your schedule C.  If not you better be able to account for every difference.  If it is higher he will increase your income by that amount.  \n\nIf there were deposits to your account for reasons other than business income then you need to show proof where it came from.  For example your brother gave you $5,000 as a birthday gift.  \n\nGive him every thing in a nice orderly package, tie each amount on the return to the package.  DO NOT GIVE HIM A SHOEBOX.  If the auditor feels you are not hiding anything then he not ask for more information if you are upfront with a lot of information.\nBut do not give him more than he really needs to know.\n\nIf he asks you "Do you know what time it is?" the correct answer is "Yes" the wrong answer is "It is 9:45am"\n\nIf you do not know the answer tell him "I will check and get that information for you"  Do not lie, make up information.  you will trip over your own toes.  Do not have any one else there with you, they will give out useless information that can bite you.\n\nBefore your first meeting you will get an IDR#1 this is called a Information Document Request #1 and will list every item on it that he will need.  It will narrow down where he will be looking at.\n\nAt the end of the first meeting he will ask you for more information.  Ask him for another IDR.  Do not give him more information unless it is listed on the IDR!  \n\nAlso keep a list of what information you do give him.\n\nIf you feel you are getting into trouble CALL A CPA from a local cpa firm spend the money because he may save you from thousands if you are really going to get into trouble.  Or talk to your friends, one of them may know someone who works at a firm that could advise you for a small fee.\n\nBe aware that Schedule C returns are the most audited 1040 returns out there.
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Balance Sheet is the statement that shows the financial position of the Company.It shows the assets and liabilities of the company.Its usually prepared at the end of the accounting period.
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It's not considered relevant for most jobs.  However, if you have access to the company's money, they may look into your credit because they fear that if you're in a bad credit situation you may need money and be tempted to take some of theirs.
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One reason a company may be reluctant to disclose their earnings is when the company has an employee union. This puts the company at a definite disadvantage if the union is aware of the true financial picture during contract negotiations.\n\nThe other reason is that most companies are "old school" and don't consider that employees need to know this information. What they don't realize is that if an employee is trained to understand the financial picture and the company shows them how they can contribute to the bottom line, the employees are more willing to help the company, especially if the employees see where it can benefit them.
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First step is to list all the events that cause a cash inflow or cash outflow.  Then make sure the list is in chronological order (earliest event first, then the next, all the way through to the last).  Make sure that the events are truely cash related: for example if the entity incurs a liability on 1 August, receives an invoice on 31 August, and pays the invoice on 14 September - the cash outflow only occurs on 14 September.\n\nHow can this be used to structure the analysis?  It can be very helpful to see exactly when capital providers (shareholders or creditors) need to provide funds, and exactly when they can expect to receive funds.  It can also help to determine whether the company has enough cash on hand to meet its needs - sometimes a company can be profitable on paper but not have enough liquid cash to meet its needs.\n\nThis sounds like part of a homework question you are having trouble with.  If you are looking for additional accounting based examples, the case study below is a great example of a company with liquidity issues.
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It is talking about the design and use of the company's accounting system.\nThis system should be designed so that it provides all the necessary management information to help decision making.\nSales should be analysed so that meaningful information can be gained about which customers are buying which products.\nPurchases should be analysed so that departmental costs and profit/loss are available,, etc
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Because it gives a creditor a "snapshot" of the company's financial health (assets, liabilities, owner's equity). \n\nAlso, at my bank the owner has to sign the F/S stating that it is "true and accurate". If any of the info proves to be otherwise, then the person/company has presented fraudulent/misleading info to a federally insured institution and that opens up a Pandora's box of problems for the person/company including possible "criminal liability".
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Yes, because their function is to provide title insurance to the legal owners. They would like to presume the signers are honest. If not, there are data bases all over, not the least of which is credit, which provide them the information.
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That's because of the privacy laws.  You have to have some "interest" in order to pull a credit score or credit report - like you're a landlord or something, doing the credit check for underwriting reasons.  And you aren't going to get it for free, because the companies that compile the information at THEIR cost, do it to sell to others, that's how they make THEIR money.
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Only a certified accountant could answer this for you---and surely you have one (?) and if not---you better get one-----The number of stores that you have---even the level of actual business you are doing has but certain input into whether or not your business is solid in its entirity---alot of factors go into this summary----Major companies with unbelievable cash flow go under on a regular basis for any number of reasons---too rapid in expanding being one of the culprits---assumation of debt loads beyond the business' capabilities is another---Major Repeat Problem with alot of business that fails is the fact that the people running the business are very familiar with their product or service and are emersed in that and have no skills or focus on the actual bottom line of the overall business---So there is no way anyone here can answer your question with any certainty---YOU NEED AN ACCOUNTANT---NOW
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The financial statement is just that, it states the companies financial position. It will list, assets, liabilities, A/R, A/P, inventories. This reflects a period of time. If the companies liabilities exceed the assets, then your in trouble.
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If there was a lawsuit won against the company for damages then the liablity is "Limited" to the assets of the company, not the assets of the owners of that company, that is the main difference, there are also different regulations regarding the reporting of accounts etc.
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C. Risk.\n\nThe firm is more highly levered so a downturn might put them into bankruptcy.  There's no indication that they are using the money for useful purposes.  They could be using it to increase management's wealth or ego.
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If I understand this question, you, the company, is paying the creditor the money.  In this case, it would be a decrease to Cash (the asset) listed as a credit, and a decrease to a liability, such as accounts payable, listed as a debit.  In other words, these would the the journal entries:\n                           Debit                Credit\nCash                  1800\n      Accounts Payable                 1800
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I think they're looking for liens and tax problems.  I had TERRIBLE credit following a layoff and have never have any problems. Banks are a little different because they have to bond you, but I think you can relax.
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I am a Realtor.  I ask qualifying questions to make sure that the buyers I am working with can purchase the homes we are looking at.  I have never asked for bank statements.  However, a lender will have to have them to send the loan to underwriting to document your income.  That is just part of the application process for a loan.  A good real estate agent will ask qualifying questions in order to keep from wasting everyone's time looking at homes you cannot afford.