Your client is preparing financial statements to show the bank. You know that he
ID: 2425820 • Letter: Y
Question
Your client is preparing financial statements to show the bank. You know that he has incurred a refrigeration 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 paid the $1,255 bill yet. Your client is on the accrual basis of accounting. He does not want the refrigeration repair expense on the books as of the end of the month because he wants his profits to look good for the bank. For your initial post discuss the following: Is your client behaving ethically by suggesting that the refrigeration repair expense should not be booked until the $1,255 is paid? Are you behaving ethically if you go along with the client's request? What principle is involved here? For your reply post do you agree? Disagree? Is there anything else you feel your classmate should consider in this situation.
Explanation / Answer
No, he is not behaving ethically as he is following accrula basis of accounting he has to book the expense when it is occured not on when it is paid.
If i accept his work then i am not behaving ethically it is a wrong to my profession
This comes under matching principle.
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