When Cutter & Buck revealed two weeks ago that it padded sales figures in 2000 by recording $5.8 million in shipments that were mostly returned, the news came as a surprise to many investors. But it wasn't the first time the Seattle sportswear retailer's shipping and accounting practices have been called into question. Shortly before co-founder joey Rodolfo left in 1997, he accused the company of shipping orders months before customers were expecting them, a method of prematurely booking sales. Some customers and former employees say early shipments persisted for years after Rodolfo raised the issue. And late last week, Chief Executive Fran Conley said an internal investigation has found that early shipments were more extensive than I had known" and may force the company to further restate sales figures. Shipping and booking orders ahead of schedule to meet short-term sales goals a practice sometimes called channel stuffing - is not, by definition, illegal. But by essentially borrowing from future sales to claim bigger current sales and profit, it can be used to boost a company's bottom line and create a misleading appearance of growth for investors. This article provides a good way to introduce the topic of channel stuffing. When a company stuffs the channel, it ships inventory ahead of schedule, filling its distribution channels with more product than is needed. Since companies often record sales as soon as they ship products, channel stuffing can make it appear that business is booming 1. Is this practice legal and why? 2. Is it an acceptable practice according to GAAP and why? 3. Is it an ethical practice or not and why