Ima Hogg Wants to Borrow Money to Expand Her Business

Essay

Ima Hogg wants to borrow money to expand her business.Her plan is to open a new store on each of the major islands in the Caribbean.She knows that her bank will want to see a full set of this year's financial statements before agreeing to lend the company money.Ima tells the company accountant,Tom Trueheart,not to pay December rent or utilities.That way there will be less rent expense and utility expense on this year's income statement.
1.What effect will failing to pay these bills have on this year's income statement? How will the balance sheet be affected? Why would Ima Hogg ask Tom Trueheart to do this?
2.Would it be ethical for Tom to do as Ima asks? Why?