Dress-for-Success, Inc. is a successful C Corporation in its sixth year of business and already has $5 million gross sales. The company sells and automatically ships gently used clothing items to online customers. It collects the monthly fixed fee at the beginning of each month and ships one item each week. The owner, Linda Smith, does not see any reason to follow GAAP accounting principles. The company is not publicly traded but does put the financial statements on the companys Web page for customers to see. Research this issue and answer the following:

• Explain how Dress-for-Success is accounting for the transactions under the cash basis method and how she should account for them if she did follow GAAP.
• Should Dress-for-Success, Inc. use GAAP? Why or why not?
• Are there any ethical issues in this situation? Explain.