A new Chief Executive Officer (CEO)was hired by a company on December 10,2015.The CEO has been promised a significant bonus if 2016 net income is 10% more than 2015 net income.The CEO is considering taking the following actions:
A) Overstating the cost of machinery purchased in 2016
B) Prepaying 2016 expenses in 2015
C) Deferring 2016 expenses to 2017 and accruing revenues in 2016 that do not exist
D) Recording revenues earned in 2016 as unearned revenues
Required:
Explain how each of these actions would impact the 2016 net income amount and decide if the action is ethical.
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