• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Ethics in accounting

Extracts from this document...

Introduction

Terri Ronsin has just transferred to a new position as divisional controller. One of her first tasks as divisional controller is to develop the division's predetermined overhead rate for the upcoming year. The predetermined overhead rate is computed by dividing the estimated total manufacturing overhead cost by the estimated total direct-labor hours. The production manager estimates that she will need about 440,000 direct-labor hours to meet the sales projections for the year. Teri develops the predetermined overhead rate and goes to her manager for approval. ...read more.

Middle

In this situation the overapplied overhead would be closed out to Cost of Goods Sold. This would be done by debiting Cost of Goods Sold and crediting Manufacturing Overhead resulting in a decrease in Cost of Goods Sold. At the end of the year, Cost of Goods Sold and operating expenses are subtracted from sales. The result of this is the net operating income. Therefore, if the Cost of Goods Sold is lower, then the net operating income will be higher. ...read more.

Conclusion

Therefore Teri Ronsin should not go along with the general manager's plan to manipulate the predetermined overhead rate. The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management specifies what should be done if an employee suspects unethical conduct. The code says that the employee should discuss the problem with an immediate supervisor, unless they are involved. Since in this case Teri's manager is involved, she should go to the next higher management level. She should also consult her attorney to be sure of any legal obligations and rights concerning the ethical dilemma. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Accounting section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Accounting essays

  1. An Analysis Of harmonization issues of accounting standards

    numeral amount of specific accounting treatments, as well as the requirement of information disclosure. From the point of view of Jiping, W (2004) thinks that, during 2003, the differences between IFRS and CAS has the effect on the net profit, includes method of depreciation of the fixed assets.

  2. Contemporary issues in management accounting - Target costing,Life cycle costing andQuality ...

    For example, a "neon key" that shines in the dark was designed to meet a customer requirement about being able to find car keys in a dark parking lot. * Market price was established using the Ford fiesta as an initial benchmark and adjusted for feature differentials between the two cars.

  1. Management Accounting

    Rent may be uncontrollable over the short term but is controllable in the long term. 6. Flexible budgets are not exactly flexible and are in fact part flexible and part fixed. The part showing the fixed cost is in fact a fixed budget.

  2. Carlton Computers Accounting Standards

    These conditions are; the seller's price to the buyer is substantially fixed or determinable at the date of sale, the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product, the buyer's obligation to the

  1. Issues in International Accounting

    countries, it is forecast to decline sharply to 37 per 100 people by 2010 as fixed telephony loses market share to the growing popularity of mobile (or cellular) telephony. Explosive growth in mobile communications in the 1990s led to the number of mobile-phone subscribers reaching 204 million (69 per 100 people)

  2. Code of Ethics for Professional Accountants

    As a result, it cans greater cost effectiveness as well as better quality of advice. (Kolia, F., 2006) Moreover, it is obvious that if the auditor involved in assessing tax significant events of his audit client and process during the year, they will be far better place to perform the

  1. australian accounting standards

    They would continue to monitor compliance and to take appropriate enforcement action. 2. Identify and explain how AASB standards, SAC's or Interpretations and Abstracts (see AASB 1048) can deal with the following specific issues: Overstatement of the carrying value of assets It is possible for an entity to record the

  2. Pro Forma Earnings Disclosures Must be Regulated. Discuss

    assure the marketplace that pro forma disclosures are clear, consistent, informative, and free from management bias. COMPANIES USE PRO FORMA DISCLOSURES TO MANAGE MARKET PERCEPTIONS OF EARNINGS Before pro forma earnings disclosures by public companies exploded in the 1990's, analysts relied primarily on GAAP financial statements to determine the value of a firm.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work