posted by Brian .
It is stand accounting procedures, or GAAP, to make an adjusting entry to remove the current year’s principle from the long-term liabilities. This entry reduces the long-term liabilities and increases the current liabilities. You are the bookkeeper for Biker’s Business. Biker’s Business has a bank loan that requires a current ratio of 1.5 times. The owner has asked that you do not make the adjusting entry to take the current portion from the long-term liabilities. You know if you make the adjusting entry Biker’s Business’ loan will need to be repaid immediately (or the loan called). What should you do?
There's only one ethical answer, isn't there?