Ethics is an integral part of accounting theory, ensuring financial reporting is conducted with honesty and integrity. Accounting principles promote transparency, discouraging fraudulent activities such as misrepresentation of financial data. Ethical accounting practices build trust among investors, stakeholders, and regulatory bodies. Violations of ethical standards can result in legal consequences and damage to a company’s reputation. Accounting theory incorporates ethical considerations to maintain credibility in financial reporting, ensuring businesses operate responsibly and adhere to industry standards.