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HORNGREN'S ACCOUNTING - Eleventh EditionChapter 4: Completing the Accounting CyclePage 1 of 4Ethical Issue 4-1Requirements1.2.Solution:Requirement 1DateAccounts and ExplanationDebitCredit31Dec Accounts Recieveables10,000Revenue10,000As a result, Accounts Receivable will tend to increase which will result in an overall incrin Current Assets. On the other hand as nothing has changed in the section of CurrentLiabilities so it would remain the same. Hence it will result in a change in the Current RRequirement 2Recording the revenue which the firm has not made seems to be unethical in nature.The principle of Revenue Recognition will be used by the firm. It will help the companylook financially better as it will result in an increase in its Current Ratio.. It may not be unethical but false indication as well to attract more capital. Howeveranother thing to be kept in mind is the decrease in the loan provided by the bank due tothe wrong information been provided to them.