1.

As we know, the main goal of the business will always be to earn profit. However, I believe that
if the business is aligned and driven by this specific goal alone, it will never have a valuable
result that could benefit the people. Businesses, above all, should have a definite goal or
motivation—one that is socially responsible and morally acceptable.

To be able to contribute something essential should be the driving force of the businesses to
thrive. Examples of these community-oriented objectives are the goal of decreasing
unemployment rate in the area where the business will be built, promoting a product that will
benefit the community at lower price, or presenting long term solutions to other social needs or
on financial crisis period. It should be noted that the businesses are “responsible not only for
what they do, but also for what they do not do” (Janoskova & Daniela, 2018). This strategic goal
of helping the community to better the circumstances of the people does not detriment the
businesses’ profitability. In support, according to Janoskova and Daniela (2018), corporate social
responsibility can be an opportunity for progress and a competitive tool. They emphasized that
having social responsibility does not mean that the business will give up its main goal of
generating profit. Results in the same case study concludes the positive relationship of social
goals and profitability, showing that an increase of employment in the community results an
increase in profitability of the business. Therefore, by developing goals aligned in social
development, they are establishing trust and engagement to people that could last a lifetime.

The role of the accounting profession regarding these goals is essential. It is important that
the business has standard and accurate financial reports as these will be the basis of the overall
performance and position of the entity. Accountants help in overall decision making of the
business using the financial statements they provide. Moreover, it is because of the forecasts and
efficient product costing that the businesses can offer lower prices to the people. They also
provide transparency in actions made by the business, promoting honesty and integrity to
stakeholders. By having the concepts under accounting, the business will be able to have sound
decisions. At the length, “professional accountants are directly related to the promotion of
sustainable development initiatives at the corporate level” (Makarenko & Plastun, 2017).
2.
The cash basis is indeed an easier method to prepare since it is very straightforward in terms
of recording the flow of cash within the entity. However, I think that using this in computing for
the profit or loss of the company is not advantageous. The main reason is because of the
inconsistency the cash basis can represent. Which can lead to many misinterpretations that could
put the business in an entropy. We must note that the use of cash basis in accounting is only
effective in small companies or sole proprietorships where there isn’t much account to include in
the financial statements, and not very much applicable for companies with complex and
sophisticated accounting system.
In support, Lyon, Kelley, and Margheim (2021) clearly stated that “cash-basis is largely
appealing due to its simplicity, but it can result in misleading financial statements, as it does not
record business activities as they happen”. Meaning to say, cash basis would have been effective
only if there are no deferred or advanced payments (accounts payable, accounts receivable,
advanced payments from customers, etc.), but since these are integral part of the business, the
cash basis to measure the profit and expenses will not be accurate enough. This method has the
tendency to show that the business is beyond profitable when in fact, you only haven’t paid your
bills yet. Or it can deliver bad news that the business generated loss for particular period when in
truth, the customers just haven’t paid yet, and the business settled bills and loans during the
month. This makes the profits and expenses misstated. Therefore, if the cash basis is used, the
faithful representation of the amounts will be violated.
Subsequent to that, the financial statement will not be able to serve its purpose of helping the
business to have sound economic decisions. It is unhelpful and inefficient to prepare erroneous
financial statement in the first place. And contrary to what the new manager claims, the investors
might think that the business is overstating the income or understating the expenses in order to
get them to our side. Accrual based accounting, on the other hand, might be more intricate and
laborious. But it can provide the company more accurate results and I would prefer to use the
accrual system to determine how much the business really generated for the period and how
much did they really incur thereinto. Considering all of these, especially when having the
purpose of presenting the financial statements with potential investors or creditors, the use of
cash basis in accounting for large companies will not be a very intelligent decision.
3.

Merchandise inventory is one of the most important assets of the businesses as these are
the products offered to the customers. It is true that having a higher inventory at the end of the
period results in higher net income because the cost of sales would be understated. However, if
one of my manager or superiors asked me to state the amount of ending inventory contrary to
what their real amount is, I would firmly say no.

What the manager asks for is a violation relative to the reliability principle which is one
of the concepts in accounting. Not only the manager wants me to manipulate the amount to look
impressive to the owner, but he also wants to initiate a major accounting fraud inside the
business. Presenting modified records in any of the accounts and leading the owner to the belief
that the business is doing great is a financial manipulation case and no one should be able to get
away with it. So as an accountant, I must remain truthful to the records even if the manager asks
me otherwise. In addition to that, we should remain guided by the accounting standards and
principles in order to eliminate any possibility for malpractice in our profession. A firm stand
against any malpresentation would start with us who records the money for the business.
Furthermore, if this fraudulent was investigated and disclosed, then my credentials as an
accountant of the business will be questioned since the blame would be put on me. Sophisticated
accounting procedures and forensic accounting proves effective and efficient nowadays in
determining any financial manipulation, so it is not a wise decision to listen to the manager at
this point. As stated by Ozcan (2019), modifications in any financial statements of the business
can erode the public trust and may start an internal conflict inside the organization that could be
imprinted to the image of the entity as a whole.

The answer to the question is a no brainer—I will say to the manager that it would be
inappropriate to go against the truth especially when it comes to topics related to finances and
records. Even without the principles and concepts in accounting, lying is essentially unethical.
But as we know, it might be easier than done. Manager might get upset because of the
disobedience, and sometimes there are more nuisance to that than what we think. But as long as
you give faithful representations to the amounts, together with your ethical values and accurate
accounting procedures, the truth will always prevail so we should not be scared at all.
References:

Janošková, M., & Palaščáková, D. (2018). Corporate Social Responsibility as a strategic goal in
business: A case study. Corporate Social Responsibility (CSR): Practices, Issues and
Global Perspectives, 109-144. Retrieved from: https://isdsnet.com/ijds-v10n5-02.pdf

Lyon, S. C., Kelley, T., & Margheim, L. (2021). Does the importance of relevance and faithful
representation differ between GAAP and tax reporting? A discussion of the trade-offs
between cash-basis, accrual-basis, and fair value accounting methods. Journal of
Accounting and Taxation, 13(3), 144-152. Retrieved from:
https://www.clutejournals.com/index.php/JABR/article/download/1497/1477

Makarenko, I., & Plastun, A. (2017). The role of accounting in sustainable development.
Accounting and Financial Control, 1(2), 4-12. Retrieved from:
https://www.researchgate.net/publication/325652300_The_role_of_accounting_in_sustai
nable_development

Özcan, A. (2019). Analyzing the impact of forensic accounting on the detection of financial
information manipulation. Manas Sosyal Araştırmalar Dergisi, 8(2), 1744-1760.
Retrieved from: https://dergipark.org.tr/tr/download/article-file/701580