Ethical Issue Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016. The effect of the transactions on the reported net income of the company for the year 2016.

Question

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Answer 1

Question

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

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Answer 2

Question

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Expert Solution & Answer

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Answer 4

Question

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Answer 6

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

Answer 7

Chapter 3, Problem 3.1CTEI

1.

To determine

Ethical Issue

Case Summary: The net income of Company S went down sharply in 2016, for which M, the owner seeks bank loan urgently in 2017. To impress the bank, the owner asked the accountant to overstate the net income of 2016 by adopting means like reporting the unearned revenue, and concealing some expenses to be reported in the income statement of 2016.

The effect of the transactions on the reported net income of the company for the year 2016.

Answer 8

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

Answer 9

2.

To determine

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

Answer 10

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Answer 11

3.

To determine

To Identify: The advice to be given to the accountant as a personal friend.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains how the accountant should convince the owner about the unethical actions of overstating the net income of the company.

Concept explainers

To Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.

To Identify: The advice to be given to the accountant as a personal friend.

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Chapter 3 Solutions