Reference no: EM131752244

Question: Accounting for Managers (300-400 words please)

Ethics and Financials: Accounts Receivable (M6D1)

A manager of a small electronics stores would like to expand and also sell computers. The expansion would require seeking a loan from a local bank. The manager knows net income for this year is lower than what is needed to qualify for additional financing at his current bank. The manager also realizes some of the estimates used to calculate net income could be adjusted to make net income come within the qualifying range for an additional loan.

Discuss three or more of the following questions:

1. On the income statement, overstating bad debt expense will result in what impact on operating expenses, net income, allowance for bad debts, accounts receivable?

2. To qualify for the bank loan, the manager should or should-not over/under estimate bad debt? Why?

3. Is intentionally misstating and estimate ethical? Why or why not?

4. Is intentionally misstating and estimate illegal? Why or why not?

5. List some possible consequences if bank officials detect the misstatement of the estimate.

6. Discussion some ways the misstatement of uncollectible account expense could be detected by bank officials.