Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Chip 'n Dale Ltd is a successful advertising business. It has regularly met shareholder expectations by paying regular dividends. The board of directors' policy requires
Chip 'n Dale Ltd is a successful advertising business. It has regularly met shareholder expectations by paying regular dividends. The board of directors' policy requires that for a dividend to be declared, net cash flow provided by operating activities must exceed $2 million. At the end of the current year, the accountant reports that the net cash provided by operating activities is calculated to be $1.940,000. The managing director is keen to maintain shareholders' approval and suggests to the accountant to find ways to report a cash flow from operating activities to be at least $2,000,000. The accountant considers the draft financial reports and concludes that he can get the operating cash flows to be $2 million by removing $120,000 from unearned revenue on the basis that the work has almost been completed and can be recorded as revenue. In this way the cash receipts from clients will be increased by the required amount The managing director is very grateful for the news and rewards the accountant with an extra week's leave because the dividend policy can be maintained. Required: (1) Explain how the accountant was able to manage the desired result. (ii) Discuss ethical issues concerned with this scenario
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/07/669df7c009955_607669df7bf9c423.jpg)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started