MGT223H5 Study Guide - Midterm Guide: Startup Company
Document Summary
Fall 2015 mgt421 in-class #2 - ma. Note: this is a guide and should not be considered a sample response. First time audit, first year of operations for the company. Company is hoping to go public or be bought by a large playing the industry (potential incentive to be aggressive with accounting) Need a bank loan, bank is requesting audited f/s. Lack of knowledgeable accounting staff, some incorrect accounting treatments. 2 distinct set of users, bank and kickstarter investors. Likely have different needs: bank will be concerned as to whether ma can be repay a loan, may, kickstarter users, concerned with the company"s future potential (e. g. next big app in development etc. ) Current presentation will need to be corrected (i. e. all in contributed surplus) Appears that most of this funding would be considered debt, or primarily debt. Will need to review investor list, along with terms of investment agreements, and correct accounting treatment as appropriate.
