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Ethical Case Study

Ethical Case Study

Morgan Johnson is in a tough situation. The president of her company wants her to date all the sales invoices in the first half of May as if they occurred in the month of April. It’s a hard thing to say refuse since the request is coming from such a high figure of authority as the president of the company. What she should do depends on the person she is; if she is one of strong moral character she should refuse at the expense of the possibility losing her job. On the other hand, if she wanted the inflated bonus she could manipulate the financial statements for the benefit of the company. The problem with this is she will be breaking some of the guidelines issued by the Financial Accounting Standards Board (FASB) and may face prosecution or maybe even jail time.

If she did decide to what the president is asking of her it will affect the financial statements greatly. The balance sheet will be affected in a number of ways. First of all, the assets accounts receivable or the cash, depending on how the company takes in their revenue, will be increased. The inventory will obviously decrease as the goods were sold to the customers. The retained earnings portion of the balance sheet would increase in value as the company revenues increased. Read more…

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