Question

In: Accounting

An accountant considering the motivations of managers in any specific situation is exercising: a) an unethical...

An accountant considering the motivations of managers in any specific situation is exercising:

a) an unethical behaviour.

b) bias towards management intention.

c) an ethical professional judgement.

d) prudence.

Solutions

Expert Solution

Let us consider an example

Imagine a situation where it is year end closing. Closing entries are being made. The company has made some sales which won't be reaching the customers before the 3rd day of the following month. All the risks and rewards would transfer upon delivery. In such a scenario, this part of sales should not be recognized in this month. But the management's incentives depend on this figure. SO they want the accountant to record the sales in this month itself. If the accountant adheres to the management he would be bias towards the intention of the management.

The correct answer is Option B


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