Jim is a second year accountant at a large publicly traded corporation. His boss approaches...
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Jim is a second year accountant at a large publicly traded corporation. His boss approaches him and-says, Jim, I know why we increased our warranty liability, but it puts our current ratio in violation of a loan covenant with our bank loan. I know the bank will pass on it this time, but its a big hassle to get the waiver. I just dont want to deal with it. I need you to reduce our estimate of warranty liability as far as possible. Required: How would lowering the estimate of warranty liability affect the current ratio? How should Jim respond to his boss? Given that Jims employer is publicly traded corporation, what safeguards should be at Jims disposal
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