You decide to try each method and notice that depending on w

You decide to try each method and notice that depending on which inventory method you use, the company\'s net income will be different. Bonuses are going to be awarded soon and your bonus is based on the company\'s net income. You decide to use the inventory method that creates the largest net income. Is this acceptable, why or why not?

Solution

It is not ethical to use the accounting methods which leads to largest net income for a personal advantage, in this case, to maximize own salary.

The accounts method ideally should be chosen such that it is acceptable as per accounting standards and gives the most accurate net income. This will help in understanding the true profitability of the business and will also help in planning the future direction of the business.