Mr. Blowhard’s scheme affects the amount of income because it will reduce current period expenditures by capitalizing current cost over a long period of time. The scheme that Mr. Blowhard is pulling is very unlawful, because it violates his principals in his balance sheets. To report useful financial information on a timely basis, accountants must make estimates of future results, such as salvage value and useful life of depreciable assets and uncollectible accounts expense (Edmonds, olds & McNair, 2012).
Personally, there are ways to adjust your financial records but it’s still illegal under GAAP guidelines. This scheme is act of fraud because you are making your company appear better off then they are. This accounting class has taught me a lot, especially with accountants and knowing the difference between public and private accounts. The weekly assignments have taught me to chart better with numbers, and it will help me in the long run with my business, I am really enjoying this class so far.