Carroll Company is a multi-million dollar business. The business results for the year have been impacted significanty by a slowing economy. The company wants to increase its net income. it has incurred $2,900,000 in unpaid salaries at the end of the year and wants to leave those amounts unrecorded at the end of the year.

(a) How would this omission aftect the financial statements of Carroll? 

(b) Which accrual basis of accounting principle does this omission violate?

(c) Would this be considered an ethical problem?