Writing Before analyzing the alternatives, there are some key facts to address: - As the shop rendered product or service to the client, and received cash in exchange, the transactions were deemed completed. In this case, both accrual and cash basis accounting method would require revenue recognized on the books according to section 605 of US. GAAP. Failure of doing so is a violation of US. GAAP and could result in the misrepresentation of the financial statements of the company. - Todd, pending his CPA, is not legally obligated to apply the code. However, violation of the code could be subject to revocation of membership. As a husband, he has a responsibility to protect his wife from any harm and support her career. Todd should warn Carrie about hiding some sales could be considered as the attempt of tax avoidance. Also, he should persuade his wife to think it over before committing a wrong action in a business that she intends to buy into because she will be accountable for what she will have done. - Carrie being an employee of the shop, has a duty to perform due diligence in the business when she notices that Mrs. Cook is immorally avoiding booking cash transactions - Mrs. Cook, as the owner and manager of the shop should be aware of the facts that her action will be against US. GAAP. Furthermore, she should know that she will violate tax laws if she understates her business revenue. - Mr. Heywood, the accountant of the company, also needs to perform due diligence to the company. He has to perform a reasonable investigation to find any understatement or overstatement of the books and make sure any economic activities of the company are recorded in accordance with accounting rules and principles. In the case that he learns what Mrs. Cook and Carrie are doing, he should suggest correcting the books.

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