Explain what are the ethical consideration in the given case

Assignment Help Accounting Basics

Reference no: EM131746098

Assignment

Effective financial reporting depends on sound ethical behavior. Financial scandals in accounting and the businesses world have resulted in legislation to ensure adequate disclosures and honesty and integrity in financial reporting. A sound economy is contingent on truthful and reliable financial reporting.

Instructions:

• Read the following scenario.
• Answer the questions that follow. Your answers should result in a 2-3 page submission.
• Reference back to your text book for guidance on how to think through the scenario.

Scenario:

Imagine you are the assistant controller in charge of general ledger accounting at Linbarger Company. Your company has a large loan from an insurance company. The loan agreement requires that the company's cash account balance be maintained at $200,000 or more, as reported monthly. At June 30, the cash balance is $80,000. You give this update to Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, "If we don't get that cash balance over $200,000, we'll default on our loan agreement. They could close us down, put us all out of our jobs!" Lisa continues, "I talked to Oconto Distributors (one of Linbarger's largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we'll be in the clear. It's in the mail!"

Questions

1. What is the accounting problem that the Linbarger Company faces?

2. What are the ethical considerations in this case? Provide rationale for why these are ethical considerations.

3. What are the negative impacts that can happen if you do not follow Lisa Infante's instructions to wait one more day to post the balance?

4. Who will be negatively impacted if you do comply? Provide a rationale for why these individuals will be impacted.

5. What is one alternative that you could pursue in this scenario? Support your recommendations with information you learned in this class.

Reference no: EM131746098

Questions Cloud

Concern to the international businesses environment : How political is a critical concern to the international businesses environment? Please give examples.

Define listed below are typical of those involving new books : The transactions listed below are typical of those involving New Books Inc. and Readers' Corner. New Books is a wholesale merchandiser

Construct a confidence interval for high school students : Construct a 90% confidence interval for the proportion of high school students who say that they text while driving at least sometimes

About factors affect international business environment : Discuss about factors affect international business environment, and how can international marketer scan and analyze them?

Explain what are the ethical consideration in the given case : Explain what are the ethical considerations in this case? Provide rationale for why these are ethical considerations.

Construct a confidence interval for the proportion of teens : Construct a 95% confidence interval for the proportion of teens who find texting while driving very distracting

Prepare the journal entry to record this transaction : Prepare the journal entry to record this transaction on January 2, 2017, Credit account titles are automatically indented when amount is entered

How does globalization construct or impact notions : Describe how authors Abu-Lughod (2002), Mahmood (2009) help us understand the "politics of the veil"?

Display the distributions graphically : Compute the conditional distribution of the response variable for each of the two explanatory-variable categories. Display the distributions graphically

User Account

All Pages