Question One

Linbarger Company has an agreement with an insurance company that requires the firm to disclose its cash account balance monthly. The obligation is part of the terms and conditions on which Linbarger obtained a large loan. It requires the business to maintain a cash account balance of $200,000 or more. However, there is only $80,000. Thus, the firm faces a challenge in adhering to disclosure guidelines as outlined in the agreement. By closing the cash receipt books, the company will default on the contract. Besides, keeping the records open for an extra day grants the firm an opportunity to increase the balance, given the fixed payment from Oconto Distributors, one of Linbarger’s largest customers. Thus, an accounting dilemma arises on the nest course of action in such a scenario.

Question Two

There are various ethical considerations in accounting that businesses have to adhere to and uphold. The purpose of principles that guide the processes is to ensure that institutions make smart and morally acceptable choices in accounting. The regulations impact how an organization conducts its preparation, as well as the presentation and disclosure of financial information (Freedman n.p). An ethical concern in this scenario is an element of false financing reporting by delaying access to duly completed account books. Such an action, also known as an error of ethical omission, seeks to shield investors from company records till a specific date. The rationale for the moral concern is that the company is withholding crucial information from its investors. Thus, it involves violating disclosure agreements with the loan facility provider.

Question Three

Lisa Infante, the financial vice president, receives an update on the current state of the accounting balance. She notes the deficit and instructs that the cash receipts book should remain open for one additional day for purposes of the June 30 report to the insurance company. Lisa claims that the inclusion of the check for $150,000 would save the company. Failure to comply with Lisa Infante’s instructions can have adverse impacts. It would inform the insurance company that Linbarger had evaded their loan. When unable to pay back debts, the lenders can take over the enterprise as a way of trying to recover their investments. Besides, failure to wait for one more day to post the balance may also lead to loss of jobs if the company closes down Linbarger.

Question Four

Complying with Lisa’s request would delay the processes used in preparing and sharing of information with various stakeholders. It is an ethical violation as the company intentionally omitted data from the accounting records. Such action limits clients and investors’ access to accurate company statistics. Discovery of the omission would adversely affect the general ledger accounting officer, the financial vice president, and other members in the department. Besides, their role will lead to a loss of investor and consumer confidence. Hence, the matter will affect them since they are responsible for facilitating records’ creation and dissemination of factual reports that reflect the actual state of the business.

Question Five      

In such a scenario, the business can pursue various alternatives to avoid the presentation of accounts with insufficient funds. The essence of these strategies is to shield Linbarger from take-over orchestrated by the insurance company. Instead of omitting some information from the record books and keeping them open, the firm can begin by identifying ease to liquidate assets. Thus, it can go ahead and sell some properties as a way of increasing its cash account balances to avoid unnecessary penalties associated with disclosure violations.

Work Cited

Freedman, John. “What Is an “Ethical Issue” In Financial Accounting?” Small Business Chron, 28 Jan. 2019, smallbusiness.chron.com/ethical-issue-financial-accounting-57889.html. Accessed 7 March 2019.

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