Steinbach & Sons Ethical Issue in Accounting
Step 1 Read the scenario about an ethical issue. The net income of Steinbach & Sons, a department store, decreased sharply during 2009. Mort Steinbach, owner of the store, anticipates the need for a bank loan in 2010. Late in 2009, Steinbach instructs the store's accountant to record a $2,000 sale of furniture to the Steinbach family, even though the goods will not be shipped from the manufacturer until January 2010. Steinbach also tells the accountant to make the following December 31, 2009, adjusting entries: Salaries owed to employees...........................$900 Prepaid insurance that has expired.................$400 Step 2 Post a response to the following on the discussion board. If appropriate, include personal experience in your response. What will the effects be of the overall transactions on reported income for 2009? Why would Steinbach take these actions? Is this ethical? Why or why not? What advice would you give this accountant? Why? Is there an alternative action that is ethical to help the situation? Is there an alternative action that is not ethical that would help the situation?
Discussion 3: Steinbach & Sons Ethical Issue in Accounting
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Discussion 3: Steinbach & Sons Ethical Issue in Accounting
Steinbach has realized that it has to have a positive credit statement by the end of the business year in order to attract the creditor, the bank, from whom it intend to get some loan in the coming year. The company is seen to use false pretenses to provide the bank with faulty information that it made more profit that what it actually did. By eliminating the $900 amount owed to the employees and including an expired insurance prepayment of $ 400 and sales of $ 2000 meant for the coming year, the company provides a false report in its account statements, which is unethical for any company to do. Such deliberate account entries are malicious and therefore, morally and ethical wrongful. The company’s statement of account would exposed the bank to more risks of awarding the loan to a company that does not deserve it, instead of giving the loan to other companies out there that may truly deserve the loan owing to their better ...