The text states, "over sufficiently long time periods, net income equals cash inflows minus cash outflows, other than cash flows with owners." demonstrate the accuracy of this statement in the following scenario: two friends contributed $50,000 each to form a new business. the owners used the amounts contributed to purchase a machine for $100,000 cash. they estimated that the useful life of the machine was five years and the salvage value was $20,000. they rented out the machine to a customer for an annual rental of $25,000 a year for five years. annual cash operating costs for insurance, taxes, and other items totaled $6,000 annually. at the end of the fifth year, the owners sold the equipment for $22,000, instead of the $20,000 salvage value initially estimated. (hint: compute the total net income and the total cash flows other than cash flows with owners for the five-year period as a whole.)

Ethics refers to fundamental principles of right and wrong; ethical behavior is behavior that is consistent with those principles. hrm decisions should be ethical, but the evidence suggests that is not always the case. many ethical issues in the workplace involve hrm. in the context of ethical human resource management, hr managers must view employees as having basic rights. in this activity, you will look at the four principles for ethical behavior and the basic rights employees should expect in the work environment. hr managers must view employees as having basic rights, for such a view reflects ethical principles embodied in the u.s. constitution and bill of rights. organizations often face situations in which the rights of employees are affected. ethical, successful companies act according to four principles: emphasizing mutual benefits, employees assuming responsibility for the actions of the company, companies having a sense of purpose or vision that employees value, and emphasizing fairness.