AB116: Accounting II Unit 9: Statement of Cash Flows - Discussion

This week's Discussion is centered on the case scenario presented on p. 836 in your textbook — BYP17-8 Ethics Case.

Since cash is the most important asset in a firm, success of a firm can be directly traced to its cash management. Though reliance on cash flows to the exclusion of accrual accounting is discouraged, comparing cash from operations to net income can reveal important information about the "quality" of reported net income.

Please review the Ethics Case scenario on p. 836 in your text and answer the following questions.

• Who are the stakeholders in this situation? Should they be the preparers' main concern? Why? Why not?
• Was there anything unethical about the President's actions? Was there anything unethical about the controller's actions? Explain.
• Are the board members or anyone else likely to discover the misclassification? Explain.