Homework Answers
Answer 1
Ethical
The conservatism principal allows companies to record inventory at below market value. This is as per the accounting standards and is also know a principal of prudence
Answer 2
Ethical
There is nothing wrong in buying inventory whenever the company wishes. The company can buy stock at the year end to avail discounts to maintain higher inventory to maintain timely servicing ability
Answer 3
Ethical
There is nothing wrong in buying inventory whenever the company wishes. The company can delay purchase of stock at the year end to maintain inventory levels etc
Answer 4
Unethical
The company falsified its reports in order to report higher net income. This is a fraudulent practice and hence unethical
Answer 5
Unethical
The company falsified its reports in order to cheat the government and people out of taxes. This is a fraudulent practice and hence unethical
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