You’ve just graduated from Berkeley College with a major in accounting and have
ID: 2734744 • Letter: Y
Question
You’ve just graduated from Berkeley College with a major in accounting and have landed your first accounting job. Your assignment at work today is to complete a Trial Balance. No matter what you do, you just can’t get it to balance and you’re off by $2500. You have a 5pm deadline for completion of the Financial Statements, which must be delivered to the bank this evening to comply with a major loan agreement. It’s now 3:30 and you’re worried that if you don’t get these statements done, it will cost you your job. You decide to increase the owner’s capital account by $2500 to get everything to balance and you complete the Financial Statements in time. You hope that no one will notice the error and you believe that you will be able to find and correct the error by the end of next month. Are your actions ethical? Why or why not? Did you have any other alternatives?
Explanation / Answer
Transactions are initially recorded in journal or Subsidiary books. Then they are transferred to to ledger by posting to relevant accounts.
After Balancing the ledger accounts of a business enterprise, a statement is prepared to show separately the debit and credit balances. That statement is known as Trial Balance. It is not an account. It is a statement in which debit and credit balances of all accounts in the ledger are shown to test the arithmetical accuracy of the books of accounts. It is useful device for preparation of final accounts because it contain personal, real, nominal accounts. But both debit and credit side are equal.
This means somewhere errors in the postings into ledger accounts are happened.
Examples of errors :
Adding the debit total and credit total incurrectly.
forgutting to take a ledger account on trial balance.
Putting the debit account in credit side and vice versa.
wrong calculation in ledger account totals.
In the given case the accountant has added a $2500 to their owner's capital account and balanced the trial balance.
Action is ethical because he added the same to their owner's capital account which means he has not manipulated any other ledger account which is serious.
to comply a major loan agreement in a time bound situation it is ethical.
He is willing to correct the mis-statement in later period is justify his overall interest.
why not ethical:-
It is not ethical that it is not find any body.
Alternative method:-
The difference which will arrive can be shown under suspense account and find the same to properly adjust in a later time.
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