Question - Anita Johnson was preparing the adjusting entries for her business in preparation for the adjusted trial balance and financial statements. She planned to present these financial statements to her banker to obtain a line of credit. As she was looking at the salaries earned for the last three days of the month and reasoned that if she did not accrue this expense her net income would be higher and her current liabilities would be lower. She also reasoned that these salaries would be recorded next month when they were paid so it really did not matter if she did not record them in the current month.
Is Anita acting unethically? Why or Why not?
Who will be affected by her decision?
Is this a simple matter of timing or is more at stake?