Question

Thomas Denton, Jr. was appointed the manager of Westbrook Properties, a recently formed company that manages residential rental properties. Maria Garcia is the accountant. She prepared a chart of accounts based on an analysis of the expenditures of the company. One of the largest expense categories is Travel and Entertainment. Mr. Denton believes that it is important to maintain a presence in the social life of the city. In this, he sharply differs from his father, Thomas Denton, Sr. The elder Mr. Denton has set up Westbrook Properties in order to test his son's management skills before allowing him to manage a more lucrative commercial property business. Mr. Denton, Sr. provided the capital for Westbrook, and maintains close contact with the company. He allowed his son, however, to hire his own employees.

Mr. Denton has asked Ms. Garcia to name the Travel and Entertainment account Property Development. He hopes to deflect his father's attention away from the amount he has spent on travel and entertainment until he has proven that his methods work. When Ms. Garcia resisted, he reminded her that he, not his father, hired her. He also reminded her that she had been enthusiastic about his business plans when she was hired.

Required:

      Should Ms. Garcia agree to the change in the Travel and Entertainment account to Property Development? Explain

Answer 1

Ms.Gracia Should not agree to the change in the Travel and Entertainment Account to Property Development.

1) The Travel and Entertainment Accout is not realy an expense of the company "Westbrook Properties". it is a personal expense of Mr.Thomas Denton and cannot be treated as part of the "Property Development"

2) The Accounts of any Company Should be prepared in an Un-Biased manner in order to give a True and Fair view of Financial Information to the users of Financial Statements.

3) If Ms.Grasia agrees & Change the Travel and Entertainment Account to Property Development. it will lead to a misrepresentation of accounts. The Property Development Account is overstated by such amount and it will increase the cost of Project. It will Mislead in future  when preparing an Estimates for future projects (Estimates are made from previous Financial Data)

4) It also leads Fraud in Statements, which Causes Propblems when conducting Audit of Financial statements. also leagal issues from Govt Side,Stake holdes Side,Creditors,Customers,other interest holders

5) When she agrees it becomes motivation to Mr.Denton. and he will misuse the fund of company which will be a problem to the Existence of company