It is standard accounting procedure, or a generally accepted accounting principle (GAAP), to make a journal entry to remove the current year's principle from the long-term liabilities. This entry reduces the long-term liabilities and increases the current liabilities.

Your company has a bank loan that requires a current ratio of 1.5 times. The owner has asked you, the bookkeeper, not to make the adjusting entry that would take the current portion from the long-term liabilities.

If you make the adjusting entry, the company's loan will need to be repaid immediately (or the loan called). What should you do?

How might the bank be able to catch this discrepancy on their end instead of relying on the company's financial statement? Lastly, it states you are the bookkeeper, if you have an accounting supervisor would you go to them? Why or why not?