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September 22, 2014

Homework Help: accounting

Posted by desparate on Wednesday, August 15, 2007 at 6:38pm.

Your client is preparing financial statements to show the bank. You know that he has incurred a computer repair expense during the month, but you see no such expense on the books. When you question the client, he tells you that he has not received the official bill, although he knows the expense was $1,250. Your client is on the accrual basis of accounting. He does not want the computer repair expense on the books as of the end of the month because he wants his profits to look good for the bank. Is your client behaving ethically by suggesting that the computer repair expense not be booked until the official bill is presented? Are you behaving ethically if you go along with the client's request? What principle is involved here?

I think the situation is unethical and they would be breaking some company laws, i could not think of the correct terms to use, please please, please help ... thanks


You've posted this question twice and I'm sorry it hasn't been answered. Apparently we don't have an accountant answering questions on this board.

I agree that the situation is unethical because it violates the company's accrual basis policies. The accrual method lists all expenses at the time they are incurred.

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