Here's the situation -

You are a banker or a potential investor. You have just been shown the Income Statement and Balance Sheet of a company, and they don't include adjusting entries:

1. Would you loan money to or invest in this company? Why or why not?

2. What impact would you expect the lack of adjusting entries to have on the financial statements?

3 . How would you respond to this company's request to have you consider investing in their company?