Question

M Company will report a net loss of $50,000 for the current year. The company’s president has asked the Chief Financial Officer (CFO) to record an additional $75,000 of revenue at the end of the year without providing supporting documentation. What is the most ethical thing to do?

Multiple Choice

• Trust the President and record the $75,000 of revenue without supporting documentation.

• To avoid reporting a net loss to investors and making the company look bad, add the $75,000 of revenue without supporting documentation.  

• Only record the $75,000 of revenue in the current year if supporting documentation is provided.  

• Recording the revenue without supporting documentation does not violate an ethical consideration.

Answer 1

Correct Answer is (c) Only record the $75000 of revenue in the currect year if supporting documentation is provided.

As recording any posting without supporting document is an unethical practice .so CFO should not record any transaction without certified supporting document which may lead to legal issues in future.

This is also against the standard of reporting to record transaction without supporting document . It is an unfair practice.

Due to this Financial Statment may be misleading .

Analysis of Other Option:

Option A- Trust the President and record the $75,000 of revenue without supporting documentation. -- This is an unethical practice , CFO should not trust and record any transaction

Option B- To avoid reporting a net loss to investors and making the company look bad, add the $75,000 of revenue without supporting documentation -This is an unethical practice , CFO should not record any transaction as it will mislead the Financial position of company.

Option D - Recording the revenue without supporting documentation does not violate an ethical consideration. -This violates  ethical consideration.

So Correct Statement is that CFO should record the $75000 of revenue in the currect year only if supporting documentation is provided.