In Each of the Following Situations, the Accountant for Sydney

question 134

Essay

In each of the following situations, the accountant for Sydney Design Services (Sydney) must decide how to record the information in the financial statements. Sydney is a proprietorship owned and operated by Gloria Steinwald.
1. Gloria would like to borrow money from the bank to expand the business. Since she owns a house that can be pledged as security for a bank loan, she asks the accountant to ensure that the house is shown on Sydney's balance sheet.
2. The accountant is confident that with the new contract that was signed, Sydney will be a successful business for many years to come. However, before that was finalized, he was curious whether there would be any effect on accounting for the assets and liabilities of the business if its ongoing viability had been in doubt.
Instructions
For each of the situations, identify which generally accepted accounting principle would guide the accountant in deciding how to report the situation, and describe the correct treatment.

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Definitions:

Holier-Than-Thou Effect

A cognitive bias where individuals overestimate their moral qualities or behaviors in comparison to others.

Most Likely

Refers to the highest probability or chance of an event or outcome occurring.

Country

A distinct territory defined by geographical borders, governance, and sovereignty, often recognized as a nation or state.

Triandis

Harry C. Triandis was a prominent psychologist known for his work on individualism and collectivism in cultural psychology.