Question 1 - 10 marks (1,000 words)
Jimmy is the chief accountant at clothing retailer King Ltd and has been in this role for around 10 years. King has a June 30 year end and Jimmy is finalizing the year end accounts. In finalizing the inventory valuation Jimmy has a discussion with the warehouse manager. Jimmy is informed of the existence of a large amount of slow-moving stock. A closer inspection of the stock reveals that it is ten months old and would normally have been written down several months earlier if normal procedure had been followed. Jimmy decides to follow up the issue of the stock valuation with the managing director Peter Gladstone. It is well known within the company that Peter is also a key shareholder of King. Jimmy is suspicious that Peter may have given a directive to maintain inventory values. Peter informs Jimmy that there is no need to write down the stock in the year end accounts. Jimmy suspects, however, that Peter wants the balance sheet to carry inflated stock values because he wants to sell King on terms advantageous to the shareholders. Peter goes on to tell Jimmy that he is aware of a potential buyer who is looking to inject capital into the business and that if the sale proceeds then all employees will hold onto their jobs and that Jimmy will receive a substantial pay increase.
Charles Sturt University Subject Outline ACC341 201630 SM I-10 February 2016-Version 1 Page of 7 28 Required:
a) Define the normative ethical perspectives of teleology and deontology.
b) From an ethical egoist perspective, what would be an appropriate course of action for Jimmy? Justify your choice.
c) Would your answer to b) be different if Jimmy pursued ‘utilitarianism’? Justify your position.
d) Advise Jimmy of an appropriate course of action from a deontological ethical perspective. Outline why it is based on deontological ethics.
Question 2 - 10 marks (1,000 words)
Outline the reasons why it is important for theories to be evaluated. Identify and justify the criteria you would consider before deciding that a theory appears sound. Apply the factors you have identified to an accounting theory of your choice (eg. Normative, Positive etc.).