What effect does lowering the estimate for doubtful accounts

Assignment Help Financial Accounting

Reference no: EM131268020

Kelly Steinman is the manager of a medium-size company. A few years ago, Steinman persuaded the owner to base a part of her compensation on the net income the company earns each year. Each December she estimates year-end financial figures in anticipation of the bonus she will receive. If the bonus is not as high as she would like, she offers several recommendations to the accountant for year-end adjustments. One of her favorite recommendations is for the controller to reduce the estimate of doubtful accounts.

Required

What effect does lowering the estimate for doubtful accounts have on the income statement and balance sheet?

Do you believe Steinman’s recommendation to adjust the allowance for doubtful accounts is within her right as manager, or do you believe this action is an ethics violation? Justify your response.

What type of internal control(s) might be useful for this company in overseeing the manager’s recommendations for accounting changes?

Reference no: EM131268020

Questions Cloud

Self-employed individual who owns his own business : Joe is a single, self-employed individual who owns his own business. During 2015 Joe reported $200,000 gross income and $60,000 expense from his business. He also paid $30,000 in alimony to his former spouse, $4,000 mortgage interest on his personal ..

Prepare journal entries to record merchandising transactions : Aug. 1 Purchased merchandise from Arotek Company for $5,100 under credit terms of 1/10, n/30, FOB destination, invoice dated August 1. 4 At Arotek’s request, Sheng paid $340 cash for freight charges on the August 1 purchase, reducing the amount owed ..

Antitrust laws : Prepare a research paper in APA format that demonstrates your analysis of the international legal issues that are involved in both examples.

Brief memorandum that responds to the owners concerns : You are the financial officer for Music Plus, a retailer that sells goods for home entertainment needs. The business owner, Jamie Madsen, recently reviewed the annual financial statements you prepared and sent you an e-mail stating that he thinks you..

What effect does lowering the estimate for doubtful accounts : Kelly Steinman is the manager of a medium-size company. A few years ago, Steinman persuaded the owner to base a part of her compensation on the net income the company earns each year. What effect does lowering the estimate for doubtful accounts have ..

Does warranty accrual decision create any ethical dilemma : Connor Bly is a sales manager for an automobile dealership. He earns a bonus each year based on revenue from the number of autos sold in the year less related warranty expenses. Does the warranty accrual decision create any ethical dilemma for Bly?

New depreciation rule affect profit margin of her business : Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Identify decisions that manag..

What are some procedures to detect this type of fraud : Carol Benton, Sue Knox, and Marcia Diamond work for a family physician, Dr. Gwen Conrad, who is in private practice. Dr. Conrad is knowledgeable about office management practices and has segregated the cash receipt duties as follows. Would a bank rec..

Retail sports store carrying golf apparel and equipment : Golf Mart is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of inventory has continually increased in the past two years. How does..

User Account

All Pages