Homework Help: Principles of Accounting I

Posted by Lizzie Nelson on Tuesday, September 21, 2010 at 12:39pm.

It is standard procedures, or GAAP, to make an adjusting entry to remove the current year's principle from the long-term 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 no 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?

Principles of Accounting I - Ms. Sue, Tuesday, September 21, 2010 at 12:50pm
There's only one ethically permissible answer.

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