The board of directors of Long River Limited is meeting to discuss the past years results before
releasing financial statements to the public. The discussion includes this exchange of
conversation: Samson, company CEO: "This has not been a good year! Revenue is down and
expenses are way up. If we are not careful, we41 report a loss for the third year in a row. I can
temporarily transfer some land that I own into the company's name, and that will brighten our
statement of financial position. Bruce, can you change the method of depreciation from double-
declining-balance to straight-line. Also all expenses should be paid as late as possible and
record expenses when cash is paid. Then we can probably get a better profit figure."

Bruce, company chief accountant: "Samson, you are asking too much. Generally accepted
accounting principles are designed to keep this sort of thing from happening

Required:

Discuss how Samson's proposals violate generally accepted accounting principles. Identify
each specific principle involved.

Answer rating: 100% (QA)

Samsons proposals violate several generally accepted accounting principles GAAP by manipulating the financial statements for the purpose of presenting ... View the full answer