Assumption:

You work as a commercial loan officer in a local bank. The president of a small-to-medium sized fast-food restaurant chain, with 250 employees in five locations, comes into your bank and asks for a business loan of $400,000 to help fund his expansion plans for building two additional restaurant locations.

Question(s):

What would be your concerns as the loan officer?

What questions would you ask and what financial documents might you request of him/her?

Chapter 3 discusses differences between Accrual basis and Cash basis accounting; and why Accrual basis accounting is important to practice. Explain the importance of Accrual basis accounting and how you might possibly verify that this company is following Accrual basis accounting.