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Should the utility cost be recorded

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Reference no: EM132823704

Problem 1: It is now the end of the month and time for company ABC to prepare financial statements. The utility bill for the month has not yet been received. The company accountant suggests to the plant manager that an estimate of utility usage is needed to properly make an income statement for the month. The plant manager says to "not worry about it. It's not our fault that we haven't received the bill yet and besides our income statement will look more favorable without the utility expense." Comment on this conversation. Should the utility cost be recorded? If so, when? Who is right and how should the accountant handle the situation? Which accounting principle influenced your decision?

Reference no: EM132823704

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