Accounting Question: You are the controller of a privately-held corporation. The

Question

Accounting Question:

You are the controller of a privately-held corporation. The company has just created a product that is expected to yield substantial profits in a couple of years. Right now though, the company is experiencing financial difficulties; and because of a lack of working capital, is close to default on a note they have outstanding with the bank.

At the end of the most recent fiscal year, the CEO instructed you not to record several invoices as accounts payable, which reflect bona-fide liabilities of a substantial amount, until after year-end, at which time it was expected that additional financing could be obtained. How would you handle the situation?

Explanation / Answer

The situation could be handled if all the liabilities are paid over in time. In case of lack of funds, there can be loan taken by bank or financial institutions so that the payment is done and loan is completed in a fixed interval of time. The market value of the firm can be increased by publicising the firm properly. There must be investors to whom services must be offered properly. The quality of the outcome and service depends upon the workforce which must be skilled and trained to work under pressure.

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