Charleston Company was nearing year-end and the CEO wanted to report a high level of inventory on the balance sheet. An order of raw materials was scheduled for delivery on January 2 of the next year, but the CEO asked the accounting manager to record the shipment as being received on the last day of December. The shipment was actually received on January 2^nd, and although the dollar impact of the transaction was not affected in any way, the misrepresentation of facts in the situation would make the behavior unethical.

Question

Quizplus · Accepted Answer

The misrepresentation of facts in recording the shipment as being received on December 31 when it was actually received on January 2 is unethical. Even though the transaction's dollar impact was not affected, misrepresenting facts goes against ethical accounting principles.

Charleston Company Was Nearing Year-End and the CEO Wanted to Report