Accounting Principles Homework - Finance Module, Semester 1

This assignment solution addresses several key aspects of accounting principles. It begins by examining the impact of not closing cash receipt books, highlighting violations of the cash basis of accounting and double-entry bookkeeping. The solution then delves into an ethical dilemma, emphasizing the importance of adhering to accounting principles and ethical standards, even when protecting company interests. Further, it explores the consequences of failing to follow instructions from an insurance company, including potential job loss. The assignment also analyzes the impact of complying with accounting principles on fulfilling insurance terms. Finally, it proposes electronic fund transfer as the optimal solution to overcome a cash flow problem and meet insurance requirements, thereby avoiding potential breaches of contract. The solution provides a comprehensive overview of accounting principles and their practical application in various scenarios.

Running head: ACCOUNTING PRINCIPLES
Accounting Principles
Name of the Student
Name of the University
Author note

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Accounting principles
Table of Contents
Question 1..................................................................................................................................2
Question 2..................................................................................................................................2
Question 3..................................................................................................................................2
Question 4..................................................................................................................................3
Question 5..................................................................................................................................3
Reference....................................................................................................................................4

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Accounting principles
Question 1
If the linbarger cpmpany does not close the cash receipt books for the month of June
then it will affect the cash basis of accounting system, the cash basis states that a entry is
recorded in the books only when it occurred. Further if the cash receipt books are not closed
then it will not match with the appropriate ledger from which such cash has been received.
The double entry system of book keeping will be violated. The company by not closing the
cash receipt book will not be able to reconcile the cash book and that will affect in the
preparation of the trial balance. Further this will affect in the preparation of the financial
statements as per the generally accepted accounting principle as the keeping a account open
at the end of the month will violate the principles of the accounting procedure (Christensen
Nikolaev & Wittenberg‐Moerman 2016).
Question 2
The ethical issue that will be in question in the case is that the company is not
maintaining a prudent accounting system and posted entries to protect their own interest. The
accounting principle states that under any circumstance the normal accounting procedures are
not to be violated for protecting the interest of the company. As per the accounting principles
it is not ethical to adopt any process of recording the financial transactions for fulfilling the
interest of the company. The accounting principles states that without any proper reason it
will not be possible to change the normal process of accounting and if any company do so it
will violate the ethical rules of accounting standards prescribed by the governing bodies of
the accounting profession (Duska Duska & Kury 2018).
Question 3
If Lisa infante’s instruction is not followed then in that case for breach of agreement
the insurance company will take necessary actions against the company and may sue the

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Accounting principles
company and will held all the employees responsible for such breach of contract. As a result
of such actions of the insurance company, all the employees might lose their job (Otley
2016).
Question 4
If as an assistant controller in charge of the general ledger accounting, I comply with
the normal accounting principles then it may not be possible to fulfil the terms of the
insurance company them it will negatively impacted all the employees of the organisation
including me and all of our job may get effected due to that reason (Scott 2015).
Question 5
The only alternative action that is available in this situation is to request Oconto to
transfer the fund through electronic fund transfer instead of sending a cheque. This will solve
all the problems as through electronic fund transfer the company will get the amount of
$150000 on the month of June and that will exceed their cash balance from $80000 to
$230000 and that will cover the requirement of the insurance company. There is no other
alternative method available to linbarger in order to solve the current situation (Vollmer
2019).

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Accounting principles
Reference
Christensen, H. B., Nikolaev, V. V., & Wittenberg‐Moerman, R. (2016). Accounting
information in financial contracting: The incomplete contract theory
perspective. Journal of Accounting Research, 54(2), 397-435.
Duska, R. F., Duska, B. S., & Kury, K. W. (2018). Accounting ethics. Wiley-Blackwell.
Otley, D. (2016). The contingency theory of management accounting and control: 1980–
2014. Management accounting research, 31, 45-62.
Scott, W. R. (2015). Financial Accounting Theory Seventh Edition. United States: Canada
Cataloguing.
Vollmer, H. (2019). Accounting for tacit coordination: The passing of accounts and the
broader case for accounting theory. Accounting, Organizations and Society, 73, 15-
34.