During the preparation of a bank reconciliation, the assistant controller discovered that the Bank incorrectly recorded a $3290 check as $329.  The controller has decided not to notify the bank but wait for the bank to detect the error.  The controller plans to record the $2961 error as "Other Income" if the Bank fails to detect the error within the next three months.  Please discuss whether the controller is behaving in an ethical manner.

College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter7: Accounting For Cash
Section: Chapter Questions
Problem 1CP
icon
Related questions
Question

During the preparation of a bank reconciliation, the assistant controller discovered that the Bank incorrectly recorded a $3290 check as $329.  The controller has decided not to notify the bank but wait for the bank to detect the error.  The controller plans to record the $2961 error as "Other Income" if the Bank fails to detect the error within the next three months.  Please discuss whether the controller is behaving in an ethical manner. How are cash equivalents reported in the financial statements?  Please list two examples of cash equivalents. 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Auditing: A Risk Based-Approach to Conducting a Q…
Auditing: A Risk Based-Approach to Conducting a Q…
Accounting
ISBN:
9781305080577
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
South-Western College Pub
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Quickbooks Online Accounting
Quickbooks Online Accounting
Accounting
ISBN:
9780357391693
Author:
Owen
Publisher:
Cengage
Auditing: A Risk Based-Approach (MindTap Course L…
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning