Name Professor Course Date Ethics in Accounting Linbarger Company is facing an accounting problem whereby they have a loan to repay that they took from an insurance company. The issue is that the loan agreement requires Linbarger company cash account balance monthly be maintained at $ 200 000 or more. Failure to that it defaults the company loan agreement risking the company close down or even put all employees out of their jobs. Ethics considerations in financial accounting help in making moral choices and appropriate ones considering all financial information preparation brought about by accountants. Ethics consideration in financial accounting is essential as such financial statements are relied upon by Companies in making investment decisions in the long term. Therefore opinions from accountants and statements should be well verified presenting the Company's' true and fair view. Works cited Armstrong Mary Beth J. Edward Ketz and Dwight Owsen. "Ethics education in accounting: Moving toward ethical motivation and ethical behavior." Journal of Accounting education 21.1 (2003): 1-16. Rezaee Zabihollah. "Causes consequences and deterence of financial statement fraud." Critical Perspectives on Accounting 16.3 (2005): 277-298. [...]
Effective financial reporting depends on sound ethical behavior. Financial scandals in accounting and the businesses world have resulted in legislation to ensure adequate disclosures and honesty and integrity in financial reporting. A sound economy is contingent on truthful and reliable financial reporting. Instructions: •Read the following scenario. •Answer the questions that follow. Your answers should result in a 2-3 page submission. •Reference back to your text book for guidance on how to think through the scenario. Scenario: Imagine you are the assistant controller in charge of general ledger accounting at Linbarger Company. Your company has a large loan from an insurance company. The loan agreement requires that the company’s cash account balance be maintained at $200,000 or more, as reported monthly. At June 30, the cash balance is $80,000. You give this update to Lisa Infante, the financial vice president. Lisa is nervous and instructs you to keep the cash receipts book open for one additional day for purposes of the June 30 report to the insurance company. Lisa says, “If we don’t get that cash balance over $200,000, we’ll default on our loan agreement. They could close us down, put us all out of our jobs!” Lisa continues, “I talked to Oconto Distributors (one of Linbarger’s largest customers) this morning. They said they sent us a check for $150,000 yesterday. We should receive it tomorrow. If we include just that one check in our cash balance, we’ll be in the clear. It’s in the mail!” Questions 1.What is the accounting problem that the Linbarger Company faces? 2.What are the ethical considerations in this case? Provide rationale for why these are ethical considerations. 3.What are the negative impacts that can happen if you do not follow Lisa Infante’s instructions to wait one more day to post the balance? 4.Who will be negatively impacted if you do comply? Provide a rationale for why these individuals will be impacted. 5.What is one alternative that you could pursue in this scenario? Support your recommendations with information you learned in this class.