ACCA Applied Knowledge · Business and Technology · The relationship between accounting and other business functions
The finance team at Marlow Co is asked by the sales director to report revenue early to hit a bonus target, even though the goods have not been delivered. Which role of the finance function is most directly challenged by this request?
The request most directly challenges finance's role as steward of reliable information and compliance with reporting rules. Recognising revenue before delivery would misstate results and breach accounting requirements, whereas forecasting and cash management are not the activities compromised by premature revenue recognition.
- AIts role in supporting strategic planning with forecasts
- BIts role as steward of reliable financial information and compliance with reporting rulesCorrect
- CIts role in managing day-to-day cash balances
Explanation
Recognising revenue before delivery would misstate the financial information and breach reporting requirements, so the request undermines finance's stewardship and compliance role. Forecasting and cash management are not the main issue here, as the problem is the integrity of reported figures.
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