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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Ethics in Action

Avett Manufacturing Company allows employees to purchase materials, such as metal and lumber, for personal use at a price equal to the company’s cost. To purchase materials, an employee must complete a materials requisition form, which must then he approved by the employee’s immediate supervisor. Brian Dadian, an assistant cost accountant, then charges the employee an amount based on Avett’s net purchase cost.

Brian is in the process of replacing a deck on his home and has requisitioned lumber for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Brian reviewed all the purchase invoices for the past year, He then used the lowest price to compute the amount due the company for the lumber.

The Institute of Management Accountants (IMA) is the professional organization for managerial accountants. The IMA has established four principles of ethical conduct for its members: honesty, fairness, objectivity, and responsibility. These principles are available at the IMA Web site: www.imanet.org.

Using the IMA’s four principles of ethical conduct, evaluate Brian’s behavior. Has he acted in an ethical manner? Why?

To determine

IMA:

The institute of management accountants (IMA) is one of the top professional organizations for managerial accountants. IMA has established four principles of ethical conduct for its member. They are as follows:

    • Honesty
    • Objectivity
    • Fairness
    • Responsibility.

To Explain: The behavior of B towards the IMA’s principles of ethical conduct.

Explanation

B has acted in an unethical manner and violated the principles of ethical conduct. B has used the lowest price by computing the amount due by the company for the lumber. This act violates the principle of objectivity. To be objective one must take decisions that are not influenced by the personal gains or personal feelings...

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