Ethics
advised John that the accrual basis of accounting was the most widely used
method and suggested its use for Smith Realty. John decided that the accrual
basis was too complicated and unnecessary for his business. John decided to use
the cash basis for preparing financial statements, even though a few
receivables and payables existed at the end of the period.
Discuss whether John behaved in an ethical manner by using
the cash basis for preparing company financial statements.
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