Buff Tech, Inc. sells computer components and plans to borrow some money to expand. The company has a 12/31 year-end. After reading about earnings management (refer back to Chapter 4), Bucky, the owner has decided he should try to accelerate some sales to improve his financial statement ratios. He has called his best customers and asked them to make their usual January purchases and take delivery of the goods by December 31. He told the customers he would allow them until the end of February to pay for the purchases, just as if they had made the purchases in January.

Note: For revenue recognition purposes, the performance obligation was satisfied by 12/31.

Question:

What are the ethical implications of this plan? What ratios will be improved by accelerating these sales? What about future implications?

Observation Salary Position Experience 1 $ 53,938.00 Finance 2 to 5 years 2 $ 52,694.00 Finance 2 to 5 years $ 70,515.00 Non-Finance Less than 2 years 4 $ 52,031.00 Finance 2 to 5 years 5 $ 62,283.00 Non-Finance Less than 2 years $ 57,718.00 Finance ess than 2 years $ 79,081.00 Non-Finance More than 5 years 8 $ 48,621.00 Finance Less than 2 years 9 $ 72,835.00 Non-Finance More than 5 years 10 $ 54,768.00 Finance 2 to 5 years 11 $ 52,282.00 Finance 2 to 5 years 12 $ 55,632.00 Finance Less than 2 years 13 $ 63,856.00 Non-Finance Less than 2 years 14 $ 51,827.00 Finance 2 to 5 years 15 $ 51,948.00 Finance Less than 2 years 16 $ 56,588.00 Finance 2 to 5 years 17 $ 68,858.00 Non-Finance Less than 2 years 18 $ 63,478.00 Non-Finance Less than 2 years 19 $ 83,846.00 Non-Finance 2 to 5 years 20 $ 59,253.00 Finance More than 5 years 21 $ 53,464.00 Finance Less than 2 years 22 $ 83,176.00 Non-Finance 2 to 5 years 23 $ 60,949.00 Finance More than 5 years 24 $ 52,833.00 Finance Less than 2 years 25 $ 72,914.00 Non-Finance More than 5 years 26 $ 83,040.00 Non-Finance 2 to 5 years 27 $ 64,288.00 Non-Finance Less than 2 years 28 $ 64,562.00 Finance More than 5 years 29 $ 52,644.00 Finance More than 5 years 30 $ 55,959.00 Finance Less than 2 years 31 $ 88,730.00 Non-Finance 2 to 5 years 32 $ 77,683.00 Non-Finance 2 to 5 years 33 $ 56,339.00 Finance More than 5 years 34 $ 71,345.00 Non-Finance Less than 2 years 35 $ 63,799.00 Finance Less than 2 years 36 $ 78,074.00 Non-Finance More than 5 years 37 $ 65,546.00 Non-Finance Less than 2 years 38 $ 59,057.00 Finance 2 to 5 years 39 $ 66,024.00 Non-Finance Less than 2 years 40 $ 59,457.00 Finance More than 5 years 41 $ 79,383.00 Non-Finance 2 to 5 years 42 $ 61,128.00 Non-Finance Less than 2 years 43 $ 54,122.00 Finance Less than 2 yearsRead across from the Lease Type column and choose the answer choice which best represents the type of activities le related cash ows are reported as on the statement of cash ows by lessor and lessee: Lease Type a. Operating: Finance f SalesType: h. Operating: Finance f Sales-Type: c. Operating: Finance I Sales-Type: d. Operating: Finance f Sales-Type: Multiple Choice 0 Option d Option a Oponb O Q opt-.0: : O Lessor Operating only Operating only Both Operating and Financing Operating only Operating only Operating only Both Operating and Financing Both Operating and Financing Lessee Operating only Both Operating and Financing Both Operating and Financing Both Operating and Financing Operating only Financing only Both Operating and Financing Operating only ACCOUNTING CODES Live the Information below to innew the questions that lolga Four account codes are used to identify the rahee of transactions for input into a computerized Hacounting System. The numerical codes for Wentlying transactions are constructed by manging the A two-dot number ( Table 1] ident hes the Fund Code corresponding to the fund that is receiving Totrue, paying an expenditure, or is otherwise affected by the transaction A bour-digit number (Table ]) identifies The Perounce Code for tracking activities funded with revenue hal have special accounting or reporting require A four digit number (Table 3) identifies the Function Code comespending to the activity for which a warvici or material is noquined A low-digit number (Table 4) Identifies the Object Code that classiles expenditures by type of cumodly or service, and classifies revenue by source Table 1 Table 2 FUND CLASSIFICATION CODE RESOURCE CODE Gongual Fund Unrestricted 10000 Adult Education Fund State Lottery 1100 [Child Development Fund 3010 Caletena Special Revenue Chad Numbon 5310 Defened Maintenance Fund Community Paved Ilioning Building Fund Aber School Foughton 6010 Table 3 Table 4 FUNCTION CODE OBJECT CODE Instruction 1000 Teacher Salaries 1100 2100 Certificated Support Sabines 1200 Instructional library & Telling agy | 2470 Instructional Aide Salaries 2100 Guidance / Counseling Services Classbed Support Salangs 2700 Food Services 3700 Mulenghis Supplies 4300 Community Services Noncapitalized Equipment 4OO optional for Revenues Food 4700 Suite Lobery Revenue AllCaner State Revenue 8500 Special Education . Grant tion for questions 8-15. 1100-0000-8560 refers to revenue received from: *