Q25. Write short notes on perpetual inventory system.
Ans. Perpetual inventory represents a system of maintenance of proper records and continuous stock taking. It contains the following procedure:
Its advantages are as follows:
- Valuation of stock is possible in short interval of times so profit and loss account can be prepared more quickly.
- Removing the possibility of stock discrepancies.
- It reveals the existence of surplus, non-moving and slow moving items.
- It helps in fixation of various stock levels and preparation of purchase requisition.
Q27. Explain the reasons for unethical behavior among finance and accounting professionals.
Ans. The reasons which lead to unethical behavior are as follows:
- Emphasize on short term results: This is one of the primary reasons which has led to downfall essay of many companies like Enron and world com.
- Ignoring small and unethical issues: It is known fact that most of the compromises we make are small but however they lead us into committing large infractions and ignoring minor lapses, lead to better and more huge mistakes.
- Economics Cycles: In Good times, companies are relaxed in their accounting procedures or disclosures, as there is a pervasive feeling good effect. But when times of hardships follow, then the hit taken by them is almost fatal, as was proved in the Enron case. So companies need to watch out for economic cycles scan and be vigilant in good times as well as bad.
- Accounting Rules: In the era of globalization and massive cross border flow of capital, accounting rules are changing faster than ever before. The rules have become more Complex and it is difficult to identify deviations from these complex set of requirements. The complexity of these principles and rules and the difficulties associated with identifying abuse are reasons which may promote unethical behavior.
Q26. State how far a sound ethical environment in a company may be created and corporate scandals may be avoided.
Ans. Creating an ethical environment in a company: A sound ethical environment in a company may be created and corporate scandals may be avoided by adopting the following methods:
- Ensuring that employees are aware of their legal and ethical responsibility.: Some ethical organizations are having policies to train and motivate employees towards ethical behavior. To start with, such initiation should be from the top. A number of Companies in India and abroad are being known for their quality and soundness of their ethical program-mes. Companies like Raytheon, Texas Instruments, Wipro are pioneers in establishing ethical environment among the employees enabling them to take ethical decisions. Read More …
Q25. What is the difference between morals and ethics?
Ans. Following are the points of difference between ethics and moral:
- The word ethics is derived from ancient Greek word ethios which means character. The word moral is derived from Latin word mos which means custom.
- Character is the essence of values and habits of a person or a group. It serves the analysis and employment of concepts such as right and wrong, good and evil and acting with responsibility. Moral is defined as relating to principles of right and wrong.
- Character is a personal attitude, while custom is defined by a group over a period of time. For example, people have character, society have custom.
- Morals are accepted from an authority( such as cultural, religious etc.) while ethics are accepted because they follow from personally accepted principles. An ethical view might be based on an idea of personal property that should not be taken without social consent. Moral norms can usually be expressed as general rules and statements such as “always tell the truth”.
- Morals work on smaller scale then ethics, more reliably, but by addressing human needs for belonging and emulation, while ethics has a much wider scope.
Q24. Explain the Social Sins listed by Mahatma Gandhi.
Ans. Mahatma Gandhi, Father of India, promoted non-violence, justice and harmony between people of all faiths. He stressed that people should follow ethical principles and listed following Seven Social Sins:
- Politics without Principles
- Wealth without Work
- Commerce without Morality
- Knowledge without Character
- Pleasure without Conscience
- Science without Humanity
- Worship without Sacrifice.
The first deals with the political field. The Kings of Indian tradition were only the guardian executors and servants of ‘Dharma’. For Gandhi, Rama was the symbol of a king dedicated to principles.
The second dictum deals with the spheres of Economics. Tolstoy and Ruskin inspired Gandhi on the idea of bread labor. Gandhi developed the third maxim into the idea of trusteeship. A businessman has to act as a trustee of the society for whatever he has gained from the society. Everything, finally, belongs to the society. The fourth dictum deals with knowledge. Education stands for the all round development of the individual and his character. Gandhi’s system of basic education was the system for development one’s character. In fifth maxim, Gandhi emphasize on conscience. He said that pleasure without conscience is a sin. In sixth maxim, Gandhi held that science without the thought of the welfare of the humanity is a sin. Science and humanity together pave the way for welfare of all. In seventh maximum religion, we worship but if we are not ready to sacrifice for social service, worship has no value, it is a sin to worship without sacrifice.
Q23.Explain types of self interest threats.
- Self interest threats for finance and accounting professionals working as consultant or auditors are given below:
- A financial interest in a client or jointly holding the financial interest with a client.
- Undue dependence on total fees from a client.
- Having a close business relationship with a client
- Concern about the possibility of losing a client.
- Potential employment with a client. Read More …
Q22 Explain briefly the matters to be considered and the steps that may be taken by a Finance and Accounting professional when he is required to resolve an ethical conflict in the application of fundamental principles.
Conflict resolution: While evaluating compliance with the fundamental principles, finance and accounting professional may be required to resolve the conflict on the application of fundamental principles. Read More …
Q21. Which parameters are applicable in relation to Competition Law in India?
1. Prohibition of certain agreements, which are considered to be anti-competitive in nature. Such agreements namely tie in arrangements, exclusive dealing( supply and distribution), refusal to deal and resale price maintenance shall be presumed as anti competitive if they cause or likely to cause an appreciable adverse effect on competition within India.
2. Abuse of dominant position by imposing unfair or discriminatory conditions or limiting and restricting production of goods or services or indulging in practices resulting in denial of market excess or through in any other mode are prohibited.
3. Regulation of combinations which cause or likely to cause an appreciable adverse effect on competition within the relevant market in India is also considered to be void.
Q20. Explain the Utilitarian Approach as the ethical standard?
Ans. It ethicists emphasize that the ethical action is the one that provides the most good or does the least harm, or, to put it another way, produces the greatest balance of good over harm. The ethical co-operate action, then, is the one that producers the greatest good and does the least harm for all who are affected- consumers, employees, shareholders, the community and the environment. The utilitarian approach deals with consequences, it tries both to increase the good done and to reduce the harm done.
Q19. Explain the concept of “sexual harassment” in relation to workplace.
Meaning: Sexual harassment is a situation in which an employee is coerced into giving into another employee sexual demands by the threat of losing some significant job benefit, such as promotion, raise or even the job.
Effect: This kind of degrading coercion exerted on employees who are vulnerable and defenseless inflicts great psychological harm on the employees, violates the employee’s most basic right to freedom and dignity and is an unjust misuse of the unequal power that an employer can exercise over the employee.
Remedy: Sexual harassment is prohibited, and an employer is held responsible for all the sexual harassment engaged in by employees.