Analyzing Ethical Issues in Accounting: A Case Study of Linbarger Co.

This assignment delves into the ethical considerations within accounting, specifically focusing on a scenario involving Linbarger Company and its struggle to maintain a required cash balance as per a loan agreement. The assistant controller faces a dilemma when instructed by the financial vice president to keep the cash receipts book open to artificially inflate the cash balance. The analysis covers the implications of such actions, including potential breaches of accounting principles, threats to the company's solvency, and negative impacts on stakeholders, especially the insurance company. The assignment suggests alternative solutions, such as securing short-term loans or incentivizing early customer payments, to address the cash deficit ethically. It emphasizes the importance of adhering to ethical standards in financial reporting to maintain trust and integrity in the business environment. Desklib provides students with resources such as past papers and solved assignments to aid in understanding these complex accounting issues.

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Author Note

1ACCOUNTING
1)
The company has been suffering from the problem of cash management as the cash of the
companies were not well managed. The company should plan for certain alternatives with respect to short
term funding of cash. In case the company feels to provide an alternative cash funding of short term, the
agreement conditions would not make any sense (Noval & Stahl, 2017).
2)
As per the accounting concept in relation to periodicity, a uniformity is required to be maintained
while the accounts books are being closed by a business. The receipts that has been received in 1st or 2nd
July not to be e covered under the balance sheet prepared for the period ending on 30th June. This would
point towards a wilful cumulative errors being committed for the purpose of compensating the previously
made errors. This would result into frauds being committed. The keeping of the book open until the
desired balance is arrived that would pose ethical considerations (Sheehan & Schmidt, 2015).
3)
All the aspects related to the given situation are posing threats to the solvency of the business. In
case the actions contained in the agreement has been taken by the business, the firm would be exposed
with danger with respect to its existence. However, short-term loans would be viable options for the
purpose of chipping the deficit (Noval & Stahl, 2017).
4)
The negative impact that would follow the strict adherence to the conditions of the agreement
would be the stakeholders. The unethical concern would pose serious threats towards the stakeholders
belonging to insurance company and the would be subjected to negative impacts. The purpose for which
the accounting needs to be carried out with respect to a business would be e defeated by practicing such
an unethical action (Sheehan & Schmidt, 2015).

2ACCOUNTING
5)
The deficit in balance can be resolved by inviting short term loans for a period of 1 to 2 days. It
can also be addressed by requesting the esteemed customers for making early payments with respect to
their debts with lucrative reward of discount (Noval & Stahl, 2017).

3ACCOUNTING
Reference
Noval, L. J., & Stahl, G. K. (2017). Accounting for proscriptive and prescriptive morality in the
workplace: The double-edged sword effect of mood on managerial ethical decision making.
Journal of Business Ethics, 142(3), 589-602.
Sheehan, N. T., & Schmidt, J. A. (2015). Preparing accounting students for ethical decision making:
Developing individual codes of conduct based on personal values. Journal of Accounting
Education, 33(3), 183-197.