David Berger was about to achieve his dream. Having finished culinary school and then completed his hospitality management degree, David was ready to seek the financial backing he needed to open what he firmly believed would be his first and a very successful restaurant. Dave knew food production, was truly creative in the kitchen, and considered himself a real “people person.” With his educational background and solid industry experience behind him, Dave knew that he had what it took to succeed. To begin his restaurant project, David has scheduled many appointments, including ones with the Small Business Administration (SBA) representative in his local area, the city’s largest food distributor, and a tax advisor. 

1. David is meeting with the SBA to seek the federally backed loan he needs to start his business. In your opinion, how important will be Dave’s knowledge and use of GAAP to the lenders who will consider his loan? Why would these entities care about Dave’s knowledge in this area? 

2. Dave is talking to the food distributor because he wants to establish a delivery line of credit. Doing so would allow Dave to avoid “Cash On Delivery” (COD) requirements the vendor imposes on poor credit risks. How important do you think it will be to this vendor that Dave has a thorough understanding of managerial accounting? Why? 

3. Regardless of the business entity Dave selects to operate his business, he will need to file taxes. How do you think his knowledge and proper use of manual, or automated, accounting systems that utilize GAAP will affect the price his accountant will charge to complete his tax filings?