Accounting case study analysis Example | Topics and Well Written Essays - 250 words

Accounting analysis - Case Study Example The charity Help Our Homeless Offspring, look forward towards violating the rule of exceeding 25 percent expenditure and funding to survive. They must have an expensive TV for advertisement. The resulting effect is an increased expenditure to funding ratio beyond 25 percent. Such activities are unethical and unacceptable because they contradict accounting principles (Needles, Powers and Crosson, 2011). The accountant of HOH felt that the misallocation of cost at the expense of exploiting the willing donors was an unethical act because it contradicts accounting principle (Vanderbeck, 2013). For example, the following principles were violated namely; full disclosure principle, cost principle and reliability accounting principle. HOH charity should disclose the true state of affairs and avoid misleading the donors, as well as other users of accounting information (Smith, 2011). Further, the information disclose should be reliable to avoid making wrong decision. The senior accountant in this case tends to justify unethical acts applied by the company (Lerner and Cashin, 2009). As an accountant who adheres to the accounting ethics, it will be inappropriate to do nothing because misallocation of cost contravene the principle discussed. I would, therefore, tell my corporation to embrace the accounting principles. Instead of misallocating the cost to mislead the donors, the corporation should focus on minimizing its variable cost. I would not encourage my corporation to work with HOHO because the top management are encouraging unethical practices (Duska, Duska and Ragatz,