Better Days Ahead, a charitable organization, has a standing agreement with First National Bank. The agreement allows Better Days Ahead to...

Let's move systematically through these numbered questions!

1. Several different accounts will be affected as a result of Jacob Henson's actions:

Accounts that would experience a credit include:

- liabilities (from the overdraft)

- expenses

- assets

Accounts that would experience a debit include:

- revenue

- equity

2. A negative bank balance would be listed in the Trial Balance as an overdraft. This Trial Balance lists all of the accounts and their balances that...

Let's move systematically through these numbered questions!

1. Several different accounts will be affected as a result of Jacob Henson's actions:

Accounts that would experience a credit include:

- liabilities (from the overdraft)

- expenses

- assets

Accounts that would experience a debit include:

- revenue

- equity

2. A negative bank balance would be listed in the Trial Balance as an overdraft. This Trial Balance lists all of the accounts and their balances that appear in the lifetime financial records of "Better Days Ahead." This report separates out credit and debit into different columns. Thus, if we are being specific, the overdraft would be marked down in the debit column of the Trial Balance.

3. Let's for the sake of the argument define ethics as the principles guiding "right action" around the business' conduct. Technically speaking, First National Bank has agreed to allow Better Days Ahead to overdraw its cash balance when funds are running low. The question itself doesn't inform us whether or not funds are actually running low when Henson overdraws. You might argue that it wouldn't make sense to expand if the stability of financial operations are already at stake; you could also argue that the expansion is being done in order to revitalize these low numbers. Let's go with the latter option: Henson technically isn't doing anything "unethical" in that the agreement does stand with the bank. However, is this necessarily a wise decision? Not really. The money spent on fundraising might have proven beneficial in bringing in donations, but from the sound of the situation (specifically, his maintained negative balance), it doesn't appear to have worked. The vague information about the office equipment also does not inspire a lot of confidence in me: was this new equipment truly necessary? Or was it simply upgrading already functional equipment? We don't have that information.

4. For the above reason, no, I do not approve of Henson's management of funds. It does not bode well for the company that he was unable to correct the negative balance.