On January 20, 2017, Tamira Nelson, the accountant for Picton
Enterprises, is feeling pressure to complete the annual financial
statements. The company president has said he needs up-to-date
financial statements to share with the bank on January 21 at a
dinner meeting that has been called to discuss Picton’s obtaining
loan financing for a special building project. Tamira knows that
she will not be able to gather all the needed information in the
next 24 hours to prepare the entire set of adjusting entries. Those
entries must be posted before the financial statements accurately
portray the company’s performance and financial position for the
fiscal period ended December 31, 2016. Tamira ultimately decides to
estimate several expense accruals at the last minute. When deciding
on estimates for the expenses, she uses low estimates because she
does not want to make the financial statements look worse than they
are. Tamira finishes the financial statements before the deadline
and gives them to the president without mentioning that several
account balances are estimates that she provided.
1. Identify several courses of action that Tamira could have
taken instead of the one she took.
2. If you were in Tamira’s situation, what would you have
done? Briefly justify your response.