To Ensure a Profit in the Current Year, the Manager

question 53

Multiple Choice

To ensure a profit in the current year, the manager ships out pre-ordered merchandise the last week of December, instead of in mid-January as the customer instructed. This early shipment could be a violation of which ethical standard?

• A)Confidentiality
• B)Integrity
• C)Competence
• D)All of the above

Understand the accrual basis of accounting, including recognition of expenses and revenues in the period they are incurred rather than when cash is exchanged.

Identify and apply the principles of revenue recognition, including the new standards for recognizing revenue from contracts with customers.

Comprehend the concepts of liabilities and assets and their impact on the financial statements when transactions occur.

Recognize the correct treatment of prepaid expenses and unearned revenues in accounting entries.

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Definitions:

Variable Manufacturing Overhead

The costs that vary with production volume, such as indirect materials, utilities, and labor involved in the manufacturing process.

Machine-Hour

A measure of production output or activity based on the number of hours a machine is operated.

Fixed Manufacturing Overhead

A consistent cost incurred during manufacturing that does not vary with the level of production, such as salaries of managers or rent.

Cooling Coil

A component used in refrigeration and air conditioning systems to transfer heat and cool down air or liquids passing through it.