Solution Code: 1BDB
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A classic example of the incorporation of the management accounting report in the financial accounting report is when the cost of the product manufactured by the business is used in the income statement to arrive at the profitability of operations of the business. This cost report is normally in the form of a detailed cost sheet. (AccountingCoach.com, 2016)
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Where the same organization breaks or circumvents the law in terms of tax evasion or avoidance, manipulation of the accounts to inflate profits and attract prospective capital; it no longer remains an ethical organization in the eyes of the community and society. This rule holds good, no matter what the ruling of the court may state later on.
But the statement is partly debatable in instances where the so called lawful and ethical organization decides to locate its plant in a location that it is lawfully allowed to do even though the decision will impact the local community decision to build a school in the same location. Here, the company’s decision may not be completely ethical as warranted by the circumstances of the situation.
e. Where the board member who is a major shareholder leaves the meeting room while the tenders are being discussed, Principle 2 is invoked which states such that the board ought to be independent and objective.
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