Sam Sleimy Wants to Borrow Money to Expand His Lawn

Essay

Sam Sleimy wants to borrow money to expand his lawn maintenance business.He knows that his bank will want to see a full set of this year's financial statements before agreeing to lend the company money.Normally his company bills customers at the end of each month,for services that have already been performed.Sam tells the company accountant,Tom Trueheart,to start billing all regular customers in advance,and record revenue for the amounts that have been billed.This means that bills for January of next year will be sent out in December.
1.What effect will billing customers in advance have on this year's income statement for the year ended December 31? How will the balance sheet be affected? Why would Sam ask Tom Trueheart to do this?
2.Would it be ethical for Tom to do as Sam asks? Why?