Homework Help is Here – Start Your Trial Now!
Business
Accounting
key parties who can influence, or will be affected by, your decision?

key parties who can influence, or will be affected by, your decision?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
SCENARIO: You are the staff accountant of ABC Company. Your work is mainly focuses on Accounts Receivable group. You record the accounts receivable and provide allowance for doubtful accounts based on company's estimate. On Year 2012 the company suffered from loss due to environmental disobedience. The DENR fine them 1M pesos for the infraction of the sea. With this, the company revise its policy of recording allowance of bad debts from 5% to 2%. The company has significant account receivable for the year and collection for this accounts are highly possible. On your trending analysis report, you noticed that you rarely record and write off any bad debts as part of the policy. You join the meeting with the new accounting policy and Hilary, the CFO said that the decrease of bad debts expense is immaterial to total accounts receivable. She insisted the accounting principles of materiality. Your controller agrees and immaterial to present the changes in the financial statements and ask you to calculate the potential bad debts. You calculated the new bad debts and resulted to 120,000. The total accounts receivable is 600,000. I Who are the key parties who can influence, or will be affected by, your decision? II. What fundamental ethical principles for accountants are most applicable and is there an apparent conflict between them?
Transcribed Image Text:SCENARIO: You are the staff accountant of ABC Company. Your work is mainly focuses on Accounts Receivable group. You record the accounts receivable and provide allowance for doubtful accounts based on company's estimate. On Year 2012 the company suffered from loss due to environmental disobedience. The DENR fine them 1M pesos for the infraction of the sea. With this, the company revise its policy of recording allowance of bad debts from 5% to 2%. The company has significant account receivable for the year and collection for this accounts are highly possible. On your trending analysis report, you noticed that you rarely record and write off any bad debts as part of the policy. You join the meeting with the new accounting policy and Hilary, the CFO said that the decrease of bad debts expense is immaterial to total accounts receivable. She insisted the accounting principles of materiality. Your controller agrees and immaterial to present the changes in the financial statements and ask you to calculate the potential bad debts. You calculated the new bad debts and resulted to 120,000. The total accounts receivable is 600,000. I Who are the key parties who can influence, or will be affected by, your decision? II. What fundamental ethical principles for accountants are most applicable and is there an apparent conflict between them?
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS