The manager preparing the financial statements receives a bonus based on net income.Which of the following accounting decisions could he use to increase his bonus?
A)Not recognize revenue until all the cash is collected.
B)Pick a longer life for the depreciation of fixed assets.
C)Pay out the maximum amount of dividends possible.
D)Delay the payment of expenses as long as possible.

Question

Quizplus · Accepted Answer

If the manager picks a longer life for the depreciation of fixed assets, it will decrease the amount of depreciation expense recognized in a given period, which will increase net income and result in a higher bonus. However, this decision would not be ethical as it would misrepresent the true financial position and performance of the company. The other options given would also be unethical and could harm the company's reputation or financial stability in the long run.

The Manager Preparing the Financial Statements Receives a Bonus Based