Conservative accounting in the general products division

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Conservative Accounting in the General Products Division

This case was written to motivate an ethical discussion of earnings management activities. The example presented here is different from most of those discussed because the earnings management activities described in the case decrease income. That is, the accounting is conservative. Conservatism makes us conclude the actions are ethical. But aren't managers ultraconservative merely because they want to "save" profits they can turn in a later accounting period if needed.

Questions

Do you approve of Robert's actions? Are they smart or stupid from the perspective of the division? From the perspective of the corporation?

Are Robert's actions ethical?

Should Joanne tell anyone of Robert's request?

Reference no: EM133266643

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