Status Updates From Accounting Principles [with...

Inventory fraud increases during recessions. Such fraud includes pricing inventory at amounts in excess of its actual value, or claiming to have inventory when no inventory exists. Inventory fraud usually overstates ending inventory, thereby understating cost of goods sold and creating higher income.

A tax rule, often referred to as the LIFO conformity rule, requires that if companies use LIFO for tax purposes, they must also use it for financial reporting purposes. This means that if a company chooses the LIFO method to reduce its tax bills, it will also have to report lower net income in its financial statements.

In a famous fraud, a salad oil company filled its storage tanks mostly with water. The oil rose to the top, so auditors thought the tanks were full of oil. The company also said it had more tanks than it really did: It repainted numbers on the tanks to confuse auditors.

This is not just showing off. Knowing exactly where you are
financially all of the time allows the company to respond faster than
its competitors.

Accuracy MATTERS!

“Getting the basic transaction right” is the foundation for relevant and reliable financial statements. Starting with an incorrect or inappropriate transaction leads to distortions in the financial statements."

“accounting is one degree with 360 degrees of opportunity.”

Should we expand our financial statements beyond the income, owner’s equity, balance sheet, and statement of cash flows? Some believe we should take into account ecological
and social performance. The argument is that a company’s responsibility lies with anyone who is influenced by its actions. a company should be interested in benefiting many different parties, instead of only maximizing stockholders’ interests.

Trust Everyone, But Cut The DECK.

Why did these people choose accounting? They wanted to understand
what was happening financially to their organizations.

"To be good at your business, you have to know the numbers—cold.”

To understand a business, you have to understand the financial insides of
a business organization.

34 sections