Ethical Dilemma Of Recording Unrecognized Revenue Under...

The â€Å"cooking the books† case study is intended to raise our awareness on an accounting issue that bankrupted firms and caused hundreds of employees to lose jobs. People are often challenged to make decisions on the business environment day-to-day. The contemporary companies often require following an ethical model when making these decisions. Strong decision making and business ethics can also help companies select the best business opportunities. The paper discusses a business ethic scenario and solutions to resolve the dilemma of recording unrecognized revenue under the generally accepted accounting principles (GAAP). The paper would outline steps to assess and address the problem Ethical issue exists: GAAP states revenue is recognized when a specific critical event has occurred, and the amount of revenue is measurable. In this particular case, there is an ethical dilemma involves management instructing a subordinate employee to record a significant order that was still under negotiation. The contract was not signed, and it is clear that if the employee books the transaction then it would be incorrect. For instance, if XYS Firm wants to hide the fact that it is having a horrific quarter in sales. It may then choose to recognize income that has not yet been collected as income with intention to boost its sales revenue for the quarter. It is illegal for an accounting professional to alter books under Sabane Oxley accounting rules. 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