Essay Example on Estimating Uncollectible Accounts: Sales & Receivables Method

Introduction

Most of the accountants and the financial officers use two main processes to estimate the uncollectible accounts for a given period. The main method used focuses on the sales relationship and the income statement of the uncollectible accounts which is known as the percentage of sales method. The second method that has been applied basically on the balance sheet. This is referred to as the percentage of the receivable method(1). The main applicable relationship that is focused on here is generally the accounts receivable. In other consideration, therefore, the percentage of the receivable way will estimate all the uncollectable accounts and this is mainly by determining the required size of the given allowance. The organization, however, might apply different rates for each of the overall or the receivable scale. In regards to this particular case therefore, all the percentage of the receivable methods were applied to determine the 180,000 dollars as the desired allowance.

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The Impact of the Misstatement of Funds on the Financial Statement

The financial statements of an organization are always prepared for helping in reviewing the financial performances of the company at the end of the fiscal year and aid in decision making. The financial years of most of the organizations always portray the sample of the financial statement in a balance sheet. The balance sheet can be used to show all the financial positions and transactions that have been carried out by an organization by considering the assets and the liability of the company (2). The income statement is taken into consideration in this particular case can also be referred to as the loss and profit account of the organization (1). Its there provides the operational result of the organization however the balance sheet is what will not be properly organized and balanced. The assets together with the liability of the organization will thus not be equal. However, the income statement of the organization will be affected if the organization's profit will be higher than the actual asset of the organization.

The Ethical Dilemma and Considerations as an Assistant Controller

Ethical dilemma

As an assistant controller of the organization, I have the required obligation to follow the GAAP so that a reasonably required estimate of the net that has been realized for all the values of the receivables might be made. It is thus the responsibility of the assistant quality controller to fairly represent the XYZ organization's financial statement and to relay the same information to the external users.

Ethical consideration

Most often accounting task is always complex might require judgment to be put in place by the management of the organization which might result in the desired outcome being reached. On the contrary, manipulation might always occur through a given entity to procure the required result, this in most cases is always very unethical (2). In the situation where this occurs, a person or the persons that are involved might need to consider all the options that they have that might decide to be unethical.

The Negative Impact of the Decision on the Internal and External Stakeholders.

The key internal stakeholders of the XYZ organization are the entities that operate within the business organization and they include, the managers, employees, board of directors and the investors of the XYZ organization while the external stakeholders are the entities within the organization premises itself but tend to care about the performance of the XYZ organization. They include such parties as to the consumers, regulators, investors together with the suppliers. The negative impacts that might result include termination of tenure, the reduced income of the XYZ organization in terms of the net profit that is realized and stock price devaluation for the XYZ organization. Therefore, to maintain a good working environment with both the organization and the supervisor then you need to follow the rules to the latter unless when the same might affect the organization negatively.

The Potential Consequences of Complying with the Supervisor's Instructions

There is a proper need for the assistance controller to comply with the controller's suggestion so that they can report the allowance of all the uncollectible accounts remaining at $135,000. In the process that the assistant controller does not comply with the regulation and the supervision of the management then they must be affected negatively. Some of the negative consequences that might result from the same include, lack of trust by your other managers together with the employees that are working within your organization, poor relationship between the organization and the creditors and investors. All the resulting consequences from the poor operation of not following the supervisors will affect both the individual and the organization at large.

Sources

1. PhilipReckers and MelissaSamuelson. 2016. Toward resolving the debate surrounding slippery slope versus licensing behavior: The importance of individual differences in accounting ethical decision making. Advances in Accounting, 34, 1-16. doi: 10.1016/j.adiac.2016.07.003

2. Nicholas Koumbiadis .2014. Morality, ethical awareness and ethical behavior in business: challenges for twenty-first-century organizations. Journal of Accounting & Organizational Change, 10(2). doi: 10.1108/jaoc-10-2013-0082