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Question about accounting and ethics issues.

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Accounting professionals must sometimes choose between two or more acceptable methods of accounting for business transactions and events. Explain why these situations can involve difficult matters of ethical concern.

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Solution Summary

The solution presents three examples of situations where auditors and clients may have a difference of opinion about financial presentation for certain transactions or estimates. The solution further explains how those differences can be worked out. If there is an irreconcilable difference, the next step is listed in the solution also.

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The fair presentation of financial data in financial statements prepared by CPA firms can involve choices in presentation, and many of those choices have to do with the future actions of a company. Often there are serious discussions between auditors and management about the disclosures (footnotes), as well as the amounts in the financial statements.

A particularly difficult example ...

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