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:

Self-Disclosure

The act of revealing personal information about oneself to others.

Johari Window

A model used to understand and improve self-awareness, interpersonal relationships, and communication by categorizing information about a person into four quadrants.

Open Pane

A metaphorical term from the Johari window model referring to the part of ourselves that is known both to us and others.

Hidden Pane

The pane in the Johari Window that contains information and feelings that you are hiding from other people.