The Timing and Mechanics of Accounting
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To be honest, in this scenario, all I am thinking about is that bonus I worked hard for all year long. (Even though we all feel that this is an ethical dilemma, think realistically at what most people would do. We all know right from wrong its what we do with the feelings that counts.) If the expenses are recorded this year I will be off on my target revenue by $50,000. This is a very tempting situation. Even though I realize all transactions must be recorded and accounted for, I am still only thinking about my bonus. To handle this situation the way that it will benefit me most is to employ conservation. Conservation is a method that accountants may choose to use to select “methods of measurement that yield lower net income, lower assets, and lower stock holders equity.” (Horngren, Sundem, Elliott, Philbrick, 2006) (This would be my first instinct to try to save my bonus that I have worked hard for, for the past year.)
Faced with the dilemma of losing my bonus if the supplies that were ordered are recorded this year I must come up with a plan that will assure all records are accurate and still keep my bonus. It is thought that most of the supplies will be used by year-end and must be accounted for. This being the case and the fact that I am probably not the only one who is going to be affected, the use of minimal supplies will be enacted. There are other ways to increase revenue to help compensate and meet the needed target of $1.5 million. With a $50,000 deficit to recover, so that the bonus may still be achieved, payroll will be limited to forty hour weeks for the remaining year. Depending on the nature of the business there are other methods that could be employed. Most businesses can generate revenue other than sales. An example could be the use of credit, the selling of agreements with merchandise also generates revenue for the company, and the use of knowledge. A knowledgeable salesperson can be the best asset a company can have. As long as everyone knows that something is at stake and they are all on the same page a goal of $50,000 to meet target revenue is not as large as it seems.
Reference:
Horngren, C. T., Sundem, G.L., Elliott, J.A.,& Philbrick, D.R.,(2006) Introduction to Financial Accounting 9th edition Upper Saddle River, N.J. Pearson Prentice Hall