Concept explainers
1.
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 Identify: The reason for M to adopt this method, if it is ethical, and the parties helped and parties harmed.
3.
To Identify: The advice to be given to the accountant as a personal friend.
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