Which of the Following Actions Should a Management Accountant Take

question 18

Multiple Choice

Which of the following actions should a management accountant take first in confronting a potential ethical conflict concerning your direct supervisor?

• A) Inform the Board of Directors of the existence of a potential conflict.
• B) Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counselor.
• C) Consult the attorney as to legal obligations and rights concerning the ethical conflict.
• D) Follow the organization's procedures concerning resolution of such a conflict.

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Definitions:

Modigliani

Refers to Franco Modigliani, an economist known for his work on the Modigliani-Miller theorem, which addresses the valuation of stocks and corporate taxes.

Miller

Miller refers to the Miller Modigliani theorem or Miller's theory, which deals with the capital structure of a company and the relationship between the return required by investors and the company's equity and debt.

Tax Shield

A reduction in taxable income for an individual or corporation achieved through claiming allowable deductions such as mortgage interest, medical expenses, or depreciation.

Bankruptcy Costs

Expenses associated with the process of declaring bankruptcy, including legal, administrative, and direct costs.