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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Ethics in Action

Bev Wynn, vice p resident of operations for Dillon County Bank, has instructed the bank’s computer programmer to use a 365-day year to compute interest o n depository accounts (liabilities). Bev also instructed the programmer to use a 360-day year to compute interest on loans (assets).

Discuss whether Bev is behaving in a professional manner.

To determine

Interest on loan:

Interest on loan is the amount charged on the loan principal for the privilege of borrowing money. Interest is to be paid by the borrower and to be received by the lender.

To discuss: Whether Person B is behaving in a professional manner.

Explanation

Discuss whether Person B is behaving in a professional manner.

Person B is the vice president of DC Bank. For bank, depository accounts are liabilities and loans are assets. He instructed the bank’s programmer to use 360-day per year for calculating interest on loan, and to use 365-days per year for calculating interest on depository accounts...

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