0538480718_230062 - Chapter 01.qxd 5/23/08 12:22 PM Page 45...

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Chapter 1 Introduction to Accounting and Business 45 Special Activities Blake Gillis,president of Wayside Enterprises,applied for a $175,000loan from American National Bank. The bank requested financial statements from Wayside Enterprises as a basis for granting the loan. Blake has told his accountant to provide the bank with a balance sheet. Blake has decided to omit the other financial statements because there was a net loss during the past year. In groups of three or four, discuss the following questions: 1. Is Blake behaving in a professional manner by omitting some of the financial statements? 2. a. What types of information about their businesses would owners be willing to provide bankers? What types of information would owners not be willing to provide? b. What types of information about a business would bankers want before extending a loan? c. What common interests are shared by bankers and business owners? SA 1-1 Ethics and professional conduct in business On August 1, 2009, Dr. Dana Hendley established Med, a medical practice organized as a proprietorship. The following conversation occurred the following February be- tween Dr. Hendley and a former medical school classmate, Dr. Elyse Monti, at an American Medical Association convention in New York City. Dr. Monti: Dana, good to see you again. Why didn’t you call when you were in Denver? We could have had dinner together. Dr. Hendley: Actually, I never made it to Denver this year. My husband and kids went up to our Vail condo twice, but I got stuck in Fort Lauderdale. I opened a new consulting practice this August and haven’t had any time for myself since. Dr. Monti: I heard about it . . . Med . . . something . . . right? Dr. Hendley: Yes, Med. My husband chose the name. Dr. Monti: I’ve thought about doing something like that. Are you making any money? I mean, is it worth your time? Dr. Hendley: You wouldn’t believe it. I started by opening a bank account with $30,000, and my January bank statement has a balance of $75,000. Not bad for six months—all pure profit. Dr. Monti: Maybe I’ll try it in Denver! Let’s have breakfast together tomorrow and you can fill me in on the details. Comment on Dr. Hendley’s statement that the difference between the opening bank balance ($30,000) and the January statement balance ($75,000) is pure profit. SA 1-2
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0538480718_230062 - Chapter 01.qxd 5/23/08 12:22 PM Page 45...

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