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Principle of Financial Accounting Assignment

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Added on  2020-05-28

Principle of Financial Accounting Assignment

   Added on 2020-05-28

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Running head: FINANCIAL ACCOUNTINGFinancial AccountingUniversity NameStudent NameAuthors’ Note
Principle of Financial Accounting Assignment_1
2FINANCIAL ACCOUNTINGSolution to Question D:Actions that are available to Sharon to resolve the dilemma encounteredSharon Rock operating as the assistant account of the firm Brady Industrial Productsdiscussed finalisation of financial assertions of the business with the accountant named TimO’Shea as on the period June 30 of the year 2018. As per the given case, Sharon observedthat the company acquired a huge loan from the Localtown Bank and as an element of theloan agreement, the company Brady Industrial Products had to maintain a specific ratio ofcurrent ratio of 1.2:1. The pertinent figures replicated that current assets was at $1100000,while current liabilities stood at $1000000. Sharon could identify the breach of the ethicalcode of conduct as the company failed to present the minimum ratio for the purpose of loancontracts. The accountant was of the view that the huge loan of $120000 that the companymade can be categorised as non-current receivable since the loan does not become due inanother upcoming 14 months. Essentially, this is almost certainly close to be a currentreceivable. Therefore, the accountant intends to categorise this specific loan to the particularowner as firm’s current receivable (Cameron and O'Leary 2015). This can help the firmBrady Industrial Products to avert the issue of the bank’s ratio necessity. In this regard, theaccountant Tim also thought of selling inventories or else exerting pressure on certain tradedebtors to disburse the amount that the company owes to them, although there is not enoughtime to correct the ratio of the bank (Christensen et al. 2016). However, this necessarily reflects the ethical dilemma of overstating the current receivable ofthe firm. Essentially, the current case shows a financial statement fraud where a specificfinancial item is deliberately misstated or misrepresented with the intent of misleading theuser (bank) and generating a false impression of the financial strength of the corporation(Chiang and Braender 2014). In this case, the threats that are faced can be analysed in order
Principle of Financial Accounting Assignment_2

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