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Literature review of ethics in accounting
Literature review of ethics in accounting
Ethical values in accounting
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If Hanks Snow convinced Alice Li to record the short term bank loan of $10,000 dollars as construction revenue instead of a loan it would significantly change the year-end income statement and the year-end balance sheet. It would cause the income state to state that there was net income for the year instead of a net-loss. It would also affect the year-end balance sheet by adding more cash to the balance sheet. This would affect the creditors of the company because it would not have paid the right amount of dividends to the creditors, making it a retained profit. If the company recorded this as revenue instead of a loan they would be going against the IMA standards of ethics of competence, integrity and credibility. He's breaking competence
Company Overview – Caterpillar Tractor Co. was founded in 1925 and was the product of a merger between The Holt Manufacturing Company, owned by BBB HHH, and C.L Best Tractor Co., owned by DDD BBB. The company had a great demand in WWI and this lead to the first foreign operation of many to come in the future.
Andrea may decide not to inform the limited partners about the misrepresentation of Skyline Views’s financial statements; to avoid conflict, this decision permits Ed to deceive the company and limited partners. In addition, by deciding not to inform the limited partners of Ed’s deceit, Andrea would be disregarding the American Institute of Certified Public Accountants Code of Professional Conduct in her being unreliable, dishonest and deceitful. Andrea has the responsibility of protecting her client, which involves encouraging the correction of financial statements in order to prevent suspicion during audits that could lead to fines and imprisonment. Andrea’s second option is to inform the limited partners about how misrepresentations of Skyline Views’s financial statements are permitting Ed to claim a higher management fee; this decision will fulfill her due diligence obligation to the limited partners while maintaining her integrity as a certified public accountant in supporting the American Institute of Certified Public Accountants Code of Professional Conduct.
The Commissioner of Internal Revenue (Commissioner) argued that Jim Turin & Sons, Inc. should have used the accrual method of accounting. By using the accrual method of accounting “you generally report income in the year earned and deduct or capitalize expenses in the year incurred. The purpose of an accrual method of accounting is to match income and expenses in the correct year.” (IRS, 2017).
Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved.
The Faith Mountain Company has experienced a great deal of success since opening in 1977. What Cheri and Martin Woodard began as a local store that sold herbs, related products, and antiques has slowly evolved into a major mail-order catalog company and retail store that develops, manufactures, and markets high-quality gifts, apparel, and home accessories. In 1991, Faith Mountain was still a relatively small company with less than 50 employees. However, sales have been steadily increasing for Faith Mountain, as they went from about $1.2 million in sales in 1987 to just over $5 million in 1991. In 1991 The Faith Mountain Company set for itself the overall goal of $25 million in annual sales by 1995, with $10 million coming from sales from the Faith Mountain catalog, $5 million from the retail division, and $10 million from the acquisition and development of another catalog company. Reaching these goals will have implications in all areas of operation, including expansion, human resources, marketing, and finance.
Mr. George Dodge, Clarkson Lumber Company is doing well but there is the issue of whether or not there is too high a risk in granting the request for the $750,000 line of credit. There are many supporting strong points but it also has some problems to work out. This is a company that has many good characteristics and looks promising but needs the extra money to pay off loans, inventory, and supplies. I recommend this company to receive the line of credit.
Introduction Today, when we hear the slogans "better farming, better food," or "proud to be farmer owned" one company comes to mind, Farmland Industries. We may think of this Fortune 500 company as a leading agricultural powerhouse, which it is, however, it was not always that way. Background Farmland Industries Inc. was founded by Howard A. Cowden, who was born and raised in Southwestern Missouri. Cowden started young in the cooperative business by working for the Missouri Farmers Association (MFA). However in October of 1927, he had resigned from the position of secretary for the MFA and started out on his own.
Enron’s Case of fraudulent transactions with the banking firm of Merill Lynch proves to be a perfect example of how loans are used to boost sales while in fact they’re technically not sales. In 2004 the “Nigerian barge” transaction ensued with Enron selling electricity-generating power barges to Merill Lynch. A huge sale as the company executives recorded it but it turns out it was actually a loan rather than a sale and that Enron did not actually earned from the transaction thus the investigations by the Securities and Exchange Commission in 2004. Perhaps the big question to be answered in this essay is, why is the transaction considered a loan rather than a sale? And if it were a loan, how would it affect the company’s financial statements?
His project manager, Oliver Freeman, changed the analysis. that Daniel submitted in order to get a clear opinion so that their firm may get an exclusive account. The. My decision was to report the incident so that the correct information would be supplied in the audit documents. The decision I chose may cost Baker Greenleaf to lose an important client and Oliver Freeman to lose his job, but it will uphold the integrity of the accounting profession and keep Daniel Potter safe from the liability of providing false information.
There are many highly publicized scandals about corporations getting caught using unethical and illegal accounting practices. Whether a whistle blower who is an insider with knowledge of illegal goings on at their company, a news reporter covering a story about a company ?? or an audit that might uncover financial irregularities noticing a company that is not using the generally accepted accounting practices (GAAP), a company not using the accounting standards set forth by governing oversight committees is bound to unravel.
(Potential $loss if reduce price = 94962.yr but losing market would be a bigger problem.)
Manipulation, falsification (forgery), or alteration of accounting records or documents from which the financial statements are prepared.
H&M Hennes & Mauritz is a Swedish multinational company established in 1947, known for it’s clothing for men, women, teenagers and children. It is expanded to 53 countries and as of 2013 employed around 116,000 people. It is ranked as the second largest global clothing retailer. It generated $18.13 Billion revenue in the year 2013.
The Tyco accounting scandal is an ideal illustration of how individuals who hold key positions in an organization are able to manipulate accounting practices and financial reports for personal gain. The few key individuals involved in the Tyco Scandal (CEO Kozlowski and CFO Swartz), used a number of clever and unique tactics in order to accomplish what they did; including spring loading, manipulating their ‘key-employee loan’ program, and multiple ‘hush money’ payouts.
As per usual methods of accounting large firms typically use the accrual basis of accounting. This method measures the success and position of a company by recognizing the economic situation of a company regardless of when transactions occur. The procedure requires that all revenues be accounted for the exact date they have been earned. Following the correct GAAP accounting principles the amount received should be credited to the revenue account and the debit should appear on the cash received or accounts receivable section. The accrual basis of accounting allows the current cash inflows and outflows to be combined with future expected cash inflows and outflows, it provides a clear accurate picture of companies financial condition. Mike is requiring the employee to lie on the records to make his sales revenue appear better for the previous year however the premium doesn’t begin until the 5th of January the following year. The amount received in the year should be credited in the unearned service account, as it is an unearned liability, the cash should be debited to the cash account. The biggest issue with this unethical decision is the fact that by increasing the assets received for the previous year is that in essence the book value will appear to be higher than it actually is, in return for Mikes sales revenue looking more appealing. The income statement will be changed, as net income will appear higher than if the GAAP method was employed and net sales revenue will appear greater despite the policy not beginning until the following year. . The deferred amount would effect the balance sheet because liabilities will be effected the following year with cash not appearing on the income statement for the correct year and however the...