Reference no: EM131145361
Riverside Automotive Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years. The board's policy requires that, for this dividend to be declared, net cash provided by operating activities as reported in Riverside Automotive's current year's statement of cash flows must exceed $1 million. President and CEO Carl Stewart's job is secure so long as he produces annual operating cash flows to support the usual dividend.
At the end of the current year, controller Mark Heger presents president Carl Stewart with some disappointing news: The net cash provided by operating activities is calculated by the indirect method to be only $970,000. The president says to Mark, "We must get that amount above $1 million. Isn't there some way to increase operating cash flow by another $30,000?" Mark answers, "These figures were prepared by my assistant. I'll go back to my office and see what I can do." The president replies, "I know you won't let me down, Mark."
Upon close scrutiny of the statement of cash flows, Mark concludes that he can get the operating cash flows above $1 million by reclassifying a $60,000, 2-year note payable listed in the financing activities section as "Proceeds from bank loan-$60,000." He will report the note instead as "Increase in payables-$60,000" and treat it as an adjustment of net income in the operating activities section. He returns to the president, saying, "You can tell the board to declare their usual dividend. Our net cash flow provided by operating activities is $1,030,000." "Good man, Mark! I knew I could count on you," exults the president.
Instructions
(a) Who are the stakeholders in this situation?
(b) Was there anything unethical about the president's actions? Was there anything unethical about the controller's actions?
(c) Are the board members or anyone else likely to discover the misclassification?
|
Explain customer defined value-value analysis and retention
: Explain customer defined value, value analysis and retention. Discuss product innovation models for customer retention. Discuss employee empowerment. Discuss leadership for quality. How to lead for a better quality change?
|
|
What is your projected sales volume by month
: Sales Revenue Forecast: What is your projected sales volume by month for the first year? Expense Forecast: What is your total expected marketing costs? Break your costs down by each marketing, promotion, and action program strategy that you listed ..
|
|
Create a separate class for your stack
: The purpose of the stack is to check an expression involving parentheses, braces, & brackets and determine whether they are balanced
|
|
How an individual or firm acting out of self interest
: Create an original example to demonstrate how an individual or firm acting out of self-interest (seeking profits by offering goods or services in economic markets) must benefit consumers – even if they do not care about them - more than the competiti..
|
|
Was there anything unethical about the presidents actions
: Riverside Automotive Corp. is a medium-sized wholesaler of automotive parts. It has 10 stockholders who have been paid a total of $1 million in cash dividends for 8 consecutive years.
|
|
Describe how socioeconomic status affects health care
: Socioeconomic status influences health and drives diversity in the context of health disparities. Based on readings provided, describe how socioeconomic status affects health care. Can diversity in the health care workforce promote better health c..
|
|
Importance of quality partnering and strategic alliances
: Discuss the importance of quality partnering and strategic alliances. Discuss the various forms of quality partnering and strategic alliances. Discuss the importance of quality culture
|
|
How you would implement the planning process
: Provide an example of a negotiation situation from the experience, where one of the four ways directly impacted the selection of your strategy. Analyze how you would implement the planning process into a negotiation situation to achieve your goals
|
|
Create a node structure
: Create a Node structure. Initialize the number variable to -1 and the nextNode pointer to nullptr - Add the even numbers between 0 and 40 to the list. Your list will therefore have 20 numbers in it at that point.
|