Concept explainers
1.
Ethical Case Study:
Case Summary:
MB and 2 other partners operate S Partners, a global import-export business, where MB records the
To Explain: The action of MB as ethical or not.
2.
To Identify: The People affected by the decision of MB.
3.
To Consider: The other alternatives available with MB.
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Chapter 1 Solutions
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- Farah and David decide to form a sports memorabilia retail partnership. They have known each other since business graduate school and have always worked well together on various projects. The business is doing well but cash flow is very tight. Farah takes several calls from vendors asking for payment. He believed David had been paying the bills. When he asks about this, David admits to embezzling from the partnership. What liability does Farah face as a result of the theft? Are you for or against a partnership? Please explain.arrow_forwardWHAT HAPPENS IF A PARTNER BECOMES INSOLVENT? In 2010, three dentists-Ben Rogers, Judy Wilkinson, and Henry Walker-formed a partnership to open a practice in Toledo, Ohio. The partnership's primary purpose was to reduce expenses by sharing building and equipment costs, supplies, and the services of a clerical staff. Each contributed $70,000 in cash and, with the help of a bank loan, constructed a building and acquired furniture, fixtures, and equipment. Because the partners maintained their own separate clients, annual net income has been allocated as follows: Each partner receives the specific amount of revenues that he or she generated during the period less one-third of all expenses. From the beginning, the partners did not anticipate expansion of the practice; consequently, they could withdraw cash each year up to 90 percent of their share of income for the period. The partnership had been profitable for a number of years. Over the years, Rogers has used much of his income to…arrow_forwardWHAT HAPPENS IF A PARTNER BECOMES INSOLVENT? In 2010, three dentists-Ben Rogers, Judy Wilkinson, and Henry Walker-formed a partnership to open a practice in Toledo, Ohio. The partnership's primary purpose was to reduce expenses by sharing building and equipment costs, supplies, and the services of a clerical staff. Each contributed $70,000 in cash and, with the help of a bank loan, constructed a building and acquired furniture, fixtures, and equipment. Because the partners maintained their own separate clients, annual net income has been allocated as follows: Each partner receives the specific amount of revenues that he or she generated during the period less one-third of all expenses. From the beginning, the partners did not anticipate expansion of the practice; consequently, they could withdraw cash each year up to 90 percent of their share of income for the period. The partnership had been profitable for a number of years. Over the years, Rogers has used much of his income to…arrow_forward
- An internet investment club asks Jose, a successful stockbroker, to advise its members. The club allows Jose to set up an account with a brokerage firm and gives Jose control of the account, but does not authorize Jose to withdraw funds for his own benefit. Jose, however, uses the money in the account to repay personal loans. He intends to return the money at some point in the future. Jose is charged with embezzlement. Is Jose guilty of embezzlement? Why or why not?arrow_forwardNeil and Dylan are partners in a lawn mower repair business in Ohio. While Neil is on vacation visiting his sister in Georgia, his sister's neighbor has trouble with her mower and Neil fixes it for her. She insists on paying him . Neil : O a. may keep the money as this partnership is NOT a professional business pursuant to the non - professional exception rule. O b. may not accept the money because it would create a conflict of interest. O c. may keep the payment since he did the work while he was on vacation. O d. may not accept the money because it would mean he was taking a business opportunity away from the partnership. O e. must turn the money over to the partnership because he earned it doing the kind of work that the partnership does.arrow_forwardTom gave his daughter, Nicole, permission to access his business account online but not his principal account. Tom has just discovered that Nicole took P25,000 from the principal account (current account) hoping her father would not notice it. As Tom wrote to the manager of his local bank months ago, expressly forbidding the bank to allow his daughter to do this, he wants the bank to refund the P25,000. With respect to BDO Online Account Opening Service (“Service”) Terms and Conditions, what recommendation can you give him?arrow_forward
- Joanna takes a security interest in the equipment in Jason Store and files a financing statement claiming “equipment and all after acquired equipment.” Berkeley later sells Jason Store a cash register, taking a security interest in the register, and (a) files nine days after Jason receives the register or (b) files twenty-five days after Jason receives the register. If Jason fails to pay both Joanna and Berkeley and they foreclose their security interests, who has priority on the cash register? Explain.arrow_forwardroger owns a bicycle shop. once a week he and a group of friends rent the gym of the local club to play basketball. roger collects cash from the group and writes a check to the club on his business account. he then deducts the payment as a business expense. comment on the ethics exhibited by roger and the possible consequences of his actions.arrow_forwardJames Cooper sells memberships to the Atlanta Symphony Association. TheAssociation’s procedure requires that Cooper prepare and give each customer a receipt for eachmembership sold. The receipt forms are prenumbered. Cooper is having personal financialproblems, and he kept the $500 cash received from a customer for a new membership. To hidehis theft, Cooper destroyed the Association’s copy of the receipt that he gave to the customer.What will alert manager Terry Reynolds that something is wrong?arrow_forward
- Auchiel and Ben are working in patnership as accountants. Kuria gives auchiel ksh. 100,000 for investment in some good security. Auchiel hides this to co-partner (Ben) and misappropriates the money. Kuria files a suit on the firm for the recovery of his ksh. 100,000 in your opinion, will he succeed? Give reasons.arrow_forwardThabo Baloyi is the owner of Thabo's General Dealer business in Orlando East. He started the business on 1 January 2020. He is married to Cynthia, however she has no involvement in the business. Thabo employees only one assistant, Lucas. Thabo is a member of the Infinity Medical Aid. Most of Thabo's sales are for cash, however he does provide credit sales to 2 debtors, namely, Mr Khumalo and Miss Ncube. In order to start his business Thabo took a 3-year loan from First Allied Bank on 1 February 2020. The business purchases from one supplier, AB Wholesalers on credit. Thabo's father invested R50 000 in the business, the business is expected to pay Thabo's father 1% of the profit annually in the form of a dividend. Thabo's General Dealer is a registered VAT Vendor. Q.1.1 If the persons/entities listed in the first column below are users of the financial information of Thabo's General Dealer, then place a cross in the applicable column (i.e. investor, employee, lender, etc.). If not, then…arrow_forwardReview the following scenario: Scenario: Hart Nance and Jason Symington operate gift boutiques in shopping malls. The partners split profits and losses equally, and each takes an annual drawing of $80,000. To even out the workload, Nance travels around the country inspecting their properties. Symington manages the business and serves as the accountant. From time to time, they use small amounts of store merchandise for personal use. In preparing for his daughter's wedding, Symington took inventory that cost $10,000. He recorded the transactions as follows: Debit Credit Cost of Goods Sold $10,000 Inventory $10,000 Respond to the following questions and, if appropriate, include personal experience as part of your answers. How do you feel Symington should have recorded these transactions? Why? What are the ethical implications of Symington's actions?arrow_forward