Balancing the financial position of a business can be a very tricky endeavor. Fi

Question

Balancing the financial position of a business can be a very tricky endeavor. Financial managers have a wide variety of options available to them as it relates to the management of income and expenditures. How these twin forces are approached operationally and reflected on a business balance sheet can be influenced by a financial manager. This week we will be discussing why certain decisions are made, and the different apparent effects seen on financial statements because of these decisions.

Considering this please address the following prompts in your discussion:

Can these balances be viewed as “investment” decisions?

Is the placement of “investments” in these accounts an ethical practice? Could it be designed to influence reporting results?

Explanation / Answer

Balancing the financial position affects the credibility of financial statements and hence, it is an unethical practise. It can never be viewed as Investment decision as in the long term, it would impact the balance sheet and hence, proper conclusions may not be drawn. Stakeholders of the company would not be able to assess the correct postion of the business which inturn may lead to incorrect decisions leading to destablizing the existence of the company.

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