Question

Although ethical dilemmas are frequently encountered in the business world, accountants are fortunate because adhering to GAAP solves all ethical questions.

True
False

Answer 1

Adhering to GAAP does not solve all ethical questions for accountants as ethical dilemmas often require consideration of principles beyond what GAAP provides, such as transparency and integrity.

Step-by-step explanation:

It is false that adhering to GAAP (Generally Accepted Accounting Principles) solves all ethical questions for accountants in the business world. While GAAP provides a framework for financial reporting and accounting practices, it does not address all possible ethical dilemmas that may arise.

Accountants must often use professional judgment and consider ethical principles beyond GAAP, such as transparency, fairness, and integrity when encountering complex ethical situations.

For example, an accountant might face pressure to manipulate financial results to meet earnings targets, which would be against ethical principles despite potentially being in a grey area in terms of GAAP.