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The management of a Fortune-500 corporation is infamous for "managing the numbers." As long as the executives make the financial targets, the Board of Directors takes a "hands off" approach. Executive bonuses and stock awards are dependent on making the targets.

This year, it looks like the targets will not be made. One manager decided to do a little innocent juggling of the numbers. She decided to recognize some revenue for January in December. She also went into the accounting system and changed some dates on large purchases from December to January.

•Why does it matter what month the purchases are recorded in if the date recognized is "close enough" to the desired goal?

•Was this manager's action illegal? If it is not illegal, could her practice negatively impact the company?

•Was this manager's action unethical? Why or why not?

•If this action was unethical, do you think the board is responsible or do you agree with their hands-off approach whereby they expect managers to act responsibly?

•What is the standard method used to recognize revenue and expenses?

•What accounts are involved in sales and purchases?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92181620

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