Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 20

Identify factors in an ethical decision Jennifer Rankine is an accountant for a local manufacturing company. Jennifer’s good friend, Mike Bortolotto, has been operating a retail sporting goods store for about a year. The store has been moderately successful, and Mike needs a bank loan to help finance the next stage of his store’s growth. He has asked Jennifer to prepare financial statements that the banker will use to help decide whether to grant the loan. Mike has proposed that the fee he will pay for Jennifer’s accounting work should be contingent upon his receiving the loan.

Required:

What factors should Jennifer consider when making her decision about whether to prepare the financial statements for Mike’s store?

Step 1 of 2

Window Dressing:

It refers to unethical steps taken to improve how the financial statements appear. It is used to impress a lender while applying for a loan.