Question 1:
ACME Company sells computer components and plans on borrowing some money to expand. After reading a lot about earnings management Bill the owner of ACME has decided he should try to accelerate some sales to improve his financial statement ratios. He has called his best customers and asked them to make their usual January purchases by December 31. Bill told the customers he would allow them until the end of February to pay for the purchases just as if they had made their purchases in January. What do you think are the ethical implications of Bills actions?Which ratios will be improved by accelerating these sales?
Question 2:
Some people argue that every company whether public or private should be subject to the Sarbanes-Oxley Act. Currently only public companies must follow this act. Do you feel that private companies should also have to follow the act? Discuss why or why not.