Atlantis Company sells computer components and plans on borrowing some money to expand. After reading a lot about earnings management, Andy, the owner of Atlantis, has decided he should try to accelerate some sales to improve his financial statement ratios. He has called his best customer and asked them to make their usual January purchases by December 31. Andy told the customers he would allow them, until the end of February, to pay for the purchases, just as if they had made their purchase in January.

1. Is Andy's action complying with GAAP? Why or why not? (i.e. what is the revenue recognition principle?)
2. What do you think are the ethical implications of Andy's action?
3. Which ratios will be improved by accelerating these sales?