Question

Reflect on how financing (taking a loan for your assets) changes the picture on your financial statements

Reflect on how your customer paying or not paying you promptly has an effect on your financial statements.

Write a paragraph or two about how doing the bookkeeping and accounting for a company gives you insight into the company.

Answer 1

1) Taking a loan reflects on liabilities side of the company .Indirectly it is increasing debt of the company.

At the accrue of interest also will have an impact since interest payable is credited with the interest expense

2) Customer paying or not paying may not have an effect on financial statements since if customer pays amount from accounts receivable account will move to cash and bank balance head which will have an impact on assets side only.

3 ) Bookkeeping is the process of identifying and recording transactions happening in an enterprise. Transactions might be the trading activities or buying and selling that needs to record. Owners of businesses have needed to rely on financial records kept by bookkeepers. Although records will have no value unless they are accurate and reliable.

“Accounting is the process of classifying, interpreting, summarizing and reporting on transactions and other financial events.”

An example is a daily sales report for a particular product in order compare the performance with another unit.

I hope this will help you.