1 Case Study 6-1: Ethics and Professional Conduct in Business Angela Morales National American University AC2760 Financial Accounting for Managers Letisha Thompkins August 7, 2022
2 Case Study 6-1: Ethics and Professional Conduct in Business The accrual method of accounting is with 360 days in a year because it divides equally with 12 months so that means 30 days for each month. However, before computers and the fancy automatic programs we have the today they use paper and pen and of ten times used the calendar year which had 365 to 366 days in a year. There are different regulations in the banking industry that would allow Sybil to change the discount, or adjust the days calculated in the calendar year. Regulation Q regulated how the bank could use interest to gain customers business so they will still be able to retain the accounts.This regulation would also protect the customer from going into a commitment with a bank that could not support them financially as the bank had promised.The reason the Federal Reserve Board enacted Regulation Q was in part becauseof theGreat Depression. The banks used excessive competition for deposit funds, driving down the margin between lending rates and borrowing rates. Sybil is not operating in a professional manner because the payables account and the receivables account are not uniform with their interest method. It is important that the payables account and the receivable account have uniform interest because the total amount of interest is the lowest when it only accrues for 30 days each month. The actual interest method, which is also known as the 365 method, will account the interest amount is lower because the rate is divided by 365 days, not 360. Unethical behavior is not something I would condone no matter the length of the relationship. When there are unethical behaviors there will be ill effects to the company and all
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