Which of the Following Actions Would Be Considered Unethical

question 65

Multiple Choice

Which of the following actions would be considered unethical?

• A)A company does not distribute any of its profits to stockholders.
• B)A company rounds the revenues and expenses that it reports on the income statement.
• C)An unintentional mistake made by a new accountant.
• D)The cousin of one of the business owners is hired to perform the annual audit.

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Definitions:

Interperiod Tax Allocation

An accounting technique that aims to match taxes paid with the revenues causing the tax, over periods affected by timing differences in recognizing certain items for tax and accounting purposes.

Net Income

The amount of money a company earns after deducting all its expenses, taxes, and losses from its total revenue.

Prior Period Adjustments

Prior period adjustments are corrections made to a company's financial statements for errors or omissions in previously reported periods.

Comprehensive Tax Allocation

A method of accounting that allows for the recognition of deferred tax liabilities and assets for future tax consequences of events that have been recognized in a business's financial statements or tax returns.