a.

Revenue must be recognized when it is realizable or earned, according to the revenue recognition
principle. The income should not be recorded until the members' refund option has expired and the gum
may reasonably expect cancellations in a timely manner. Until the requirements are met, the revenue
must be reported as a liability.

b. The ethical issue here is the misrecognition of money when the membership fee's performance
commitment has not been met. This will result in revenue being booked that the company has not
earned. Stakeholders will make decisions based on inaccurate financial information, which is a severe
ethical concern.

c. Joseph must reject her recommendations and instead highlight the long-term consequences of
inflating revenues. This might involve legal ramifications if you are sacked from your job. If the Treasurer
ignores his advice, he can take it to upper management and become a whistleblower of the Treasurer's
intentions if the company has such a procedure.