Suppose you are the accountant for a small cabinet building shop, and it is the

Question

Suppose you are the accountant for a small cabinet building shop, and it is the end of January. Your manager, who is also the owner of the business, is in the process of trying to get a loan from the bank. The owner must show financial statements from the previous year. The company had several thousand dollars in sales in January, and the owner wants you to include those sales in the previous year’s accounting records. You are worried, because you don’t want to upset your boss, but you also want to do what is right.Is this an ethical dilemma or a basic legal dilemma? Why? Explain how you would handle this situation.

Explanation / Answer

This is an ethical as well as legal dilemma.

It is unethical to show this years sale as previous years sale etically as it amounts to falsification of data.So it is very difficult to obey the order of the owner.

I donot want to upset my boss but at the same time , to please him I need to make present an incorrect financial statement which I do not want . so ethically it is a dilemma.

Legally also the fudging of sales data is against accounting principles and it amounts to willful misstatement of financial information. It is a punishable offence. But the same inflation of sales can only be done by doing the legally wrong work of financial fraud. Therfore not upseting the boss involves legal dilmema also.

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