Effective Writing -A handbook for accountants Chapter 7 (Critical thinking) Exercise 7-2

You are a partner in a medium-size CPA firm. One of your clients, Paul Garcia, who owns PG Corporations, has indicated a desire to report higher net income for his business this year because the company plans to apply for a loan at the bank. In an effort to increase reported net income, Mr Garcia has told his accounting department to book immediately some large sales for which contracts have been signed but for which the goods will not be manufactured or shipped until after the first of the year. Write a letter to Mr. Garcia concerning your position on this issue.