Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 14, Problem 5ATC
Ethical Dilemma Bad budget system or unethical behavior?
Clarence Cleaver is the budget director for the Harris County School District. Mr. Cleaver recently sent an urgent e-mail message to Sally Simmons, principal of West Harris County High. The message severely reprimanded Ms. Simmons for failing to spend the funds allocated to her to purchase computer equipment. Ms. Simmons responded that her school already has a sufficient supply of computers; indeed, the computer lab is never filled to capacity and usually is less than half filled. Ms. Simmons suggested that she would rather use the funds for teacher training. She argued that the reason the existing computers are not fully utilized is that the teachers lack sufficient computer literacy necessary to make assignments for their students.
Mr. Cleaver responded that it is not Ms. Simmons’s job to decide how the money is to be spent; that is the school board’s job. It is the principal’s job to spend the money as the board directed. He informed Ms. Simmons that if the money is not spent by the fiscal closing date, the school board would likely reduce next year’s budget allotment. To avoid a potential budget cut, Mr. Cleaver reallocated Ms. Simmons’s computer funds to Jules Carrington, principal of East Harris County High. Mr. Carrington knows how to buy computers regardless of whether they are needed. Mr. Cleaver’s final words were, “Don’t blame me if parents of West High students complain that East High has more equipment. If anybody comes to me, I’m telling them that you turned down the money.”
Required
- a. Do Mr. Cleaver’s actions violate the standards of ethical professional practice shown in Exhibit 10.19 of Chapter 10?
- b. Explain how participative budgeting could improve the allocation of resources for the Harris County School District.
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Patricia Smith recently leased space in the Southside Mall and opened a new business, Smith's Coi Shop. Business has been good. but Smith frequently runs out of Cash. This has necessitated late payment on certain orders, which in turn is beginning to cause a problem with suppliers. Smith plans to borrow from the bank to have cash as needed. but first she needs a forecast of just how much she must borrow. Accordingly, she has asked you to prepare a cash budget for the critical period around Christmas, when needs will be especially high.
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Chapter 14 Solutions
Survey Of Accounting
Ch. 14 - Prob. 1QCh. 14 - Prob. 2QCh. 14 - 3.What are the three levels of planning? Explain...Ch. 14 - 4.What is the primary factor that distinguishes...Ch. 14 - 5.What is the advantage of using a perpetual...Ch. 14 - Prob. 6QCh. 14 - Prob. 7QCh. 14 - 8. Ken Shilov, manager of the marketing...Ch. 14 - Prob. 9QCh. 14 - 10.What is the normal starting point in developing...
Ch. 14 - 11. How does the level of inventory affect the...Ch. 14 - 12.What are the components of the cash budget?...Ch. 14 - 13.The primary reason for preparing a cash budget...Ch. 14 - 14.What information does the pro forma income...Ch. 14 - 15.How does the pro forma statement of cash flows...Ch. 14 - Exercise 7-1A Budget responsibility Teresa...Ch. 14 - Exercise 7-2A Preparing a sales budget Parliament...Ch. 14 - Prob. 3ECh. 14 - Exercise 7-4A Preparing sales budgets with...Ch. 14 - Exercise 7-5A Determining cash receipts from...Ch. 14 - Exercise 7-6A Using judgment in making a sales...Ch. 14 - Exercise 7-7A Preparing an inventory purchases...Ch. 14 - Exercise 7-8A Preparing a schedule of cash...Ch. 14 - Exercise 7-9A Determining the amount of expected...Ch. 14 - Exercise 7-10A Preparing inventory purchases...Ch. 14 - Exercise 7-11A Preparing a schedule of cash...Ch. 14 - Prob. 12ECh. 14 - Exercise 7-13A Preparing a cash budget The...Ch. 14 - Exercise 7-14A Determining amount to borrow and...Ch. 14 - Prob. 15ECh. 14 - Problem 7-16A Behavioral impact of budgeting...Ch. 14 - Prob. 17PCh. 14 - Problem 7-18A Preparing an inventory purchases...Ch. 14 - Prob. 19PCh. 14 - Problem 7-21A Preparing a cash budget Fayette...Ch. 14 - Prob. 21PCh. 14 - Problem 7-22A Preparing budgets with multiple...Ch. 14 - Problem 7-23A Preparing a master budget for retail...Ch. 14 - ATC 7-1 Business Applications Case Preparing and...Ch. 14 - ATC7-2 Group Assignment Master budget and pro...Ch. 14 - ATC 7-4 Writing Assignment Continuous budgeting...Ch. 14 - Ethical Dilemma Bad budget system or unethical...
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