The manager of one division of a large firm receives compensation in the form of salary plus bonus. A significant portion of the total compensation is based directly on the annual profits of the division. Thus, the manager s inclined to increase profits by delaying certain expenses such as research and development, maintenance and repair of manufacturing equipment, and sales promotions. Requirement: Are the above actions unethical? Why?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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management accounting subject

The manager of one division of a large firm receives compensation in the
form of salary plus bonus. A significant portion of the total compensation is
based directly on the annual profits of the division. Thus, the manager is
inclined to increase profits by delaying certain expenses such as research
and development, maintenance and repair of manufacturing equipment, and
sales promotions.
Requirement:
Are the above actions unethical? Why?
Transcribed Image Text:The manager of one division of a large firm receives compensation in the form of salary plus bonus. A significant portion of the total compensation is based directly on the annual profits of the division. Thus, the manager is inclined to increase profits by delaying certain expenses such as research and development, maintenance and repair of manufacturing equipment, and sales promotions. Requirement: Are the above actions unethical? Why?
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