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Why the cash received for gift cards

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Reference no: EM132818038

Question - Suppose you are an accountant for a large retail company. At the end of the quarter, the General Manager (GM) tells you: "Our sales are slightly below forecast and we will not make our bonus this quarter. However, I noticed that we got a lot of cash from selling gift cards. I also noticed that this cash is not included in our quarterly sales revenue. Can you include it, so that our reported sales meet forecast and we get paid our bonus?"

1. How would you explain to the GM why the cash received for gift cards should or should not be included in your reported sales revenue?

2. What would the ethical issues be with reporting the cash received for gift cards as sales revenue?

3. How would you react to the GM's request? Specifically, would you report the cash received for gift cards as sales revenue or not?

4. After posting your own answers to the above questions, read those of your classmates and discuss them. Specifically, what would the consequences of reporting the cash received for gift cards as sales revenue be and why would you agree or refuse to report them as sales revenue.

Reference no: EM132818038

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