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Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs , and DVDs . Its reporting year - end is
Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs and DVDs Its reporting yearend is December The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow management. On November the purchasing department purchased excess inventory of CD raw materials in anticipation of rapid growth of this product beginning in January. To decrease the company's tax liability, the chief financial officer tells you to record the purchase of this inventory as part of supplies and expense it in the current year; this would decrease the company's tax liability by increasing expenses. Discuss whether the chief financial officer CFO behaved in an ethical manner. In which account should the purchase of CD raw materials be recorded? How should you respond to this request by the CFO?
Assume that you are the managerial accountant at Infostore, a manufacturer of hard drives, CDs and DVDs Its reporting yearend is December The chief financial officer is concerned about having enough cash to pay the expected income tax bill because of poor cash flow management. On November the purchasing department purchased excess inventory of CD raw materials in anticipation of rapid growth of this product beginning in January. To decrease the company's tax liability, the chief financial officer tells you to record the purchase of this inventory as part of supplies and expense it in the current year; this would decrease the company's tax liability by increasing expenses. Discuss whether the chief financial officer CFO behaved in an ethical manner. In which account should the purchase of CD raw materials be recorded? How should you respond to this request by the CFO?
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