finance- ethical/unethical behaviour

Question 1

how are ethical issues related to financial reports

Answer 1

• All businesses have ethical/legal responsibilities in relation to financial management
• Must abide by current legislation
• All stakeholders must feel assured that they are receiving accurate info about financial status

Question 2

what are the three types of stakeholders influenced by ethicacy

Answer 2

business owners, shareholders, lenders

Question 3

how businesses can be unethical? (3)

Answer 3

1)misrepresentation of financial reports
2)misuse of funds
3)tax minimisation

Question 4

what is the misrepresentation of financial reports

Answer 4

when a business purposely manipulates financial information to give a false impression of financial performance

Example : Enron business was caught overstating its revenue and understating its expenses. This was to make the business appear more profitable than it truly was to gather investors and shareholders. It encouraged investors to purchase shares, losing 74 billion usd.

Question 5

what is the misuse of funds referring to (a word)

Answer 5

business manipulates financial info to conceal the misuse of funds for own personal interest (embezzlement)

Question 6

what are the three ways a business can reduce unethical behaviour

Answer 6

1) audited accounts
2) record keeping
3) reporting practises