It is standard procedures, or GAAP, to make an adjusting entry to remove the current year's principle from the long-term liabilities. You are the bookkeeper for biker's business. Biker's business has a bank loan that requires a current ratio of 1.5 times. The owner has asked that you do no make the adjusting entry to take the current portion from the long-term liabilities. You know if you make the adjusting entry Biker's business' loan will need to be repaid immediately (or the loan called). What should you do?

Answer 1

There's only one ethically permissible answer.

What do you think it is?