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?

The client's suggestion of not booking the computer repair expense until the official bill is presented is not ethical. The principle of ethical accounting is to accurately and transparently represent financial information, not manipulate it to portray a desired image.

If you go along with the client's request and don't book the expense, you would also be acting unethically. As an accounting professional, your responsibility is to maintain integrity and adhere to accounting principles, which includes accurately recording all expenses incurred during the accounting period.

The principle involved here is the principle of honesty and integrity in accounting, which emphasizes the importance of presenting financial information truthfully and without manipulation.

Your client's suggestion to not book the computer repair expense until the official bill is presented raises ethical concerns. By intentionally delaying the recognition of the expense to make the profits look better for the bank, your client would be manipulating the financial statements and presenting an inaccurate picture of the company's financial position.

As an accountant or financial professional, it is important to uphold ethical standards and adhere to the principles of accounting. One of these principles is the accrual basis of accounting, which focuses on recognizing revenues and expenses when they are incurred, regardless of cash flow or the receipt of an invoice.

By going along with your client's request to delay booking the expense, you would be complicit in presenting misleading financial statements. This compromises the principle of fair presentation, which requires presenting financial information that is accurate, complete, and unbiased.

It is important to communicate to your client the ethical implications of their request and advise them on the importance of accurately reflecting expenses in the financial statements. As an accountant, your role is to provide reliable and trustworthy financial information to stakeholders.