Determine which of the following actions are ethical:

1. Smart Play Inc. purchased significant inventory shortly before year-end to increase the weighted-average cost of goods sold and decrease reported income for the year.

2. Franklin Truck Parts Inc. deliberately overstated ending inventory in order to report higher profits (net income).

3. Candid Industries Ltd. deliberately underestimates its Bad Debt Expense in some periods to report increasing net income.

4. In order to satisfy its bank covenants, Canvas Decorating sold long-term investments to generate additional cash.

5. To meet analysts' targets, Circuitry Electronics recorded an order as revenue in December that was shipped on January 1 and received by its customer on January 4.

a.

Action 3

b.

Actions 3 and 4

c.

Action 1

d.

Actions 1 and 4

e.

None - all are unethical

f.

Actions 1 and 3

g.

Action 2

h.

Action 5

i.

Action 4