Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answers the questions, please? Scenario: Your company has designed a new accounts payable system that utilizes a patsy code field in its vendor master file.

Answers the questions, please? image text in transcribed

Scenario: Your company has designed a new accounts payable system that utilizes a patsy code field in its vendor master file. This code is never disclosed to vendors and is used to indicate their tolerance for your company's practice of: taking unearned discounts (e.g., discounts taken after discount period) returning ordered merchandise without justification short-paying invoices (not paying full amount) paying invoices chronically late. Patsy codes values range between I and 5 represent the relative sensitivity of a vendor to such practices. A patsy code of l indicates that the expected cost of such practices would likely exceed any benefit. For example, a vendor's products are either critical to your company's mission or that the above behaviors would result in immediate negative consequences (halted shipments, revoked credit privileges). Alternatively, a patsy code of 5 indicates that the vendor is highly insensitive to such practices (e.g., your company can get away with a lot of abuse). The patsy code is used solely to determine the extent to which your company will engage in the above-described behaviors with a particular vendor. The new accounts payable system contains processing rules that utilize this code to determine whether to pay an invoice as agreed, or alternatively, when and how much to pay. Your company has ample cash reserves and easily has the ability to pay its obligations as agreed. Its only motivation for implementing this patsy code is to enhance its bottom line. Answer the following questions: 1. Can the use of a patsy code result in increased long-term profits? 2. Discuss the moral and ethical implications of implementing the above-described patsy code

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Beat The IRS At Its Own Game Strategies To Avoid And Fight An Audit

Authors: Amir D Aczel

1st Edition

1568580487, 978-1568580487

More Books

Students also viewed these Accounting questions