Tax Test

Tax Test

  • Submitted By: planko20
  • Date Submitted: 03/01/2009 11:23 AM
  • Category: Business
  • Words: 2588
  • Page: 11
  • Views: 431

Exercise 1-2 (20 minutes)
1. strategy
2. Six Sigma
3. business process
4. corporate governance
5. enterprise risk management
6. just-in-time
7. Internet
8. constraint
9. nonconstraint
10. value chain
11. enterprise system
12. supply chain management
13. lean thinking model; pulls
14. customer value proposition
15. budget
16. non-value-added activity
17. Theory of Constraints

Problem 1-4 (20 minutes)
1. No, Sarver did not act in an ethical manner. In complying with the president’s instructions to omit liabilities from the company’s financial statements he was in direct violation of the IMA’s Statement of Ethical Professional Practice. He violated both the “Integrity” and “Credibility” guidelines on this code of ethical conduct. The fact that the president ordered the omission of the liabilities is irrelevant.

2. No, Sarver’s actions can’t be justified. In dealing with similar situations, the Securities and Exchange Commission (SEC) has consistently ruled that “…corporate officers…cannot escape culpability by asserting that they acted as ‘good soldiers’ and cannot rely upon the fact that the violative conduct may have been condoned or ordered by their corporate superiors.” (Quoted from: Gerald H. Lander, Michael T. Cronin, and Alan Reinstein, “In Defense of the Management Accountant,” Management Accounting, May, 1990, p. 55) Thus, Sarver not only acted unethically, but he could be held legally liable if insolvency occurs and litigation is brought against the company by creditors or others. It is important that students understand this point early in the course, since it is widely assumed that “good soldiers” are justified by the fact that they are just following orders. In the case at hand, Sarver should have resigned rather than become a party to the fraudulent misrepresentation of the company’s financial statements.
Problem 1-7 (20 minutes)
1. If all automotive service shops routinely tried to sell parts and services...

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