Purchase Solution

Purpose of an audit and the role of ethics in the accounting

Not what you're looking for?

Ask Custom Question

Jim's Music Company uses LIFO for inventory, and the company's profits are quite high this year. The cost of inventory has been steadily rising all year, and Jim is worried about his taxes. You are Jim's accountant and you suggested that the company make a large purchase of inventory to be received during the last week in December. You explained to Jim that this would reduce his income significantly.

Jim still doesn't understand the logic of your suggestion. Explain how the purchase would affect taxable income. (1 Paragraph)

Is this ethical? Jim is uncertain about the appropriateness of this from a legal and ethical perspective. Give your opinion and explain the ethical implications of making the purchase. (1 to 2 Paragraphs)

List any References used.

Purchase this Solution
Solution Summary

This explains the purpose of an audit and the role of ethics in the accounting profession.

Solution Preview

Accounting issue: This is merely a window dressing of the accounts. It will artificially increase the purchases and the cost of goods sold will increase as the accounting basis is LIFO that is Last in first out. Thus ...

Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • government's role be with respect to regulating accounting firms in the wake of mismanagement

    A mandatory two-year waiting period before partners of audit firms, directors of audit companies and audit personnel may join an audit client as a director or in a senior management position ?

  • The Audit Committee and Corporate Governance

    Sincerely, Your OTA The article is about one of the most important aspect of corporate governance: the Audit Committee's role in providing an objective monitoring and overseeing of the accounting and financial matters of the organization as well

  • Enron Crisis of confidence: Parties responsible and why

    AICPA The AICPA is the national organization of CPAs and they have a code of ethics and professional training requirements but were not aggressive in enforcing ethics or policing their aggressive members.

  • Impact of Sarbanes-Oxley Act

    As stated in the Sarbanes-Oxley Act, the purpose of the PCAOB is to "protect the interests of investors and further the public interest in the preparation of informative, fair and independent audit reports" (www.sec.gov).

  • Role of Independent CPA: Auditing

    There is an overwhelming increase in the legal liability of the auditor. d. Analyze the importance of ethics in the audit process. Ethics are very important in auditing because: 1.

  • CPA Profession and Audit Process

    Analyze the importance of ethics in the audit process. Ethical behaviors are very important during the audit process and are essential to the structure of corporate culture.

  • role and describe

    You are an accounting professional with audit clients that are competitors in business. My audit clients are competitors and two of my clients came to know of this.

  • Implementing and Auditing Ethics Programs

    What is the difference between ethics audit and a social audit? 3. What are the benefits and challenges of an ethics audit program? 4.

  • Impact of Sarbanes-Oxley Act on Accountants

    This is an important movement since we see accounting organizations recognizing that profits are not the only purpose of accounting but getting it in an ethical way is.

View More Related Solutions