No Spacing Heading 1 Heading 2 12 Normal ACCT 201 Section 1

| No Spacing Heading 1 Heading 2 ·12/ Normal ACCT 201: Section 1 Letter Instructions The Issue: You are a partner in Acme Accounting PSC and as such are considering how to respond to a letter written to you by \"Bob\" a new client. In his letter, he stated that he is concerned that the balance sheet required by his bank would showcase his debts and make him appear to be a bad candidate for financing. He really wants to get a loan from this bank andis asking you to explain what the point of showing a company\'s liabilities on the balance sheet is, and if there is any way that you can exclude \"liabilities\" from his balance sheet. Your Partners have asked you to respond via letter The Format: Using the letter template provided on page two of this file, write a letter to \"Bob. Your letter should not exceed one page and should use the Introduction, Main Body, Conclusion format. Type drop-box. your name in the signature block, rename the file, and attach it in the appropriate Sec 1 Pages: 1 of 2 Words: 0 of 184

Solution

January 29, 2017

Mr. Bob

Dear Bob

This is to inform you that I am in receipt of your letter dated XXX and I acknowledge for the same. I would like to tell that the purpose of the balance sheet is to provide an idea of a company’s financial position so that the bank would ask for it. The balance sheet have three parts viz, assets, liabilities and owners\' equity. In this liability is the amount that the company owes and should be included as accounts payable and general debt. I can understand your reason behind your question, but I however say that this is the accounting law that we should abide. Since we are following the double entry system, every change to the total on one side brings an equal, offsetting change on the other side. So it is good from your side to show all the details in your balance sheet to the bank.

Thank you for your quere and please let me know if you wish to discuss any of these issues further.

Best Regards

XXXX