Sunnyvale Loan Company is in the consumer loan business. Sunnyvale borrows from banks and loans out the
Question:
Kimberly Burnham, the company's owner, prefers for net income to increase in a smooth pattern, rather than increase in some periods and decrease in other periods. To report smoothly increasing net income, Burnham underestimates Uncollectible-Account Expense in some periods. In other periods, Burnham overestimates the expense. She reasons that the income overstatements roughly offset the income understatements over time.
Required
Is Sunnyvale Loans' practice of smoothing income ethical? Why or why not?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Financial Accounting
ISBN: 978-0135012840
7th edition
Authors: Walter T. Harrison, Charles T. Horngren
Question Posted: