Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures less than $1,000 must be expensed. Steve decides to take a $900 expenditure and separate $600 one and combine them into one $1,500 expenditure so that the total can be capitalized thereby eliminating the effects on income. Steve's actions can be characterized as:
A) Lacking in of moral sensitivity
B) Lacking in professional skepticism
C) Loyal to the company's best interests
D) All of these

Question

Quizplus · Accepted Answer

Steve's decision to combine two separate expenditures into one larger capitalized expenditure goes against the company policy of expensing all expenditures less than $1,000. This decision could be seen as an attempt to manipulate financial statements to improve the appearance of the company's financial condition. This shows a lack of moral sensitivity and ethical behavior.

Steve Is in Charge of Accounting for the Purchase of Equipment