Accounting financial

timer Asked: Jul 15th, 2015
account_balance_wallet $20

Question description

Charles Carson is the assistant chief accountant at BIT Company, a manufacturer of computer chips and cellular phones. The company presently has total sales of $20 million. It is the end of the first quarter, and Charles is hurriedly trying to prepare a trial balance so that quarterly financial statements can be prepared and released to management and the regulatory agencies. The total credits on the trial balance exceed the debits by $1,000. In order to meet the 4:00 pm deadline, Charles decides to force the debits and credits into balance by adding the amount of the difference to the equipment account. He chose equipment because it is one of the larger account balances; percentage-wise it will be the least misstated. Charles plugs in the difference! He believes that the difference is quite small and will not affect anyone’s decisions. He wishes that he had another few days to find the error but realizes that the financial statements are already late.

Who are the stakeholders in this situation? What ethical issues are involved? What are Charles’s alternatives?

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