Purchase Solution

GAAP Violations

Not what you're looking for?

Ask Custom Question

Write a memorandum to Francis Bacon explaining how each practice violated GAAP and how each type of transaction affected reported income, financial position and cash flows.

Attached are the files and statements.

Attachments
Purchase this Solution
Solution Summary

This solution explains in detail how each practice violated GAAP and how each type of transaction affected reported income, the financial position, and cash flows.

Solution Preview

It is against BM policy for an Expert to complete an assignment, so I can't put this into memo form for you. Here are the points you want to make, along with what each point affects.

1. Channel stuffing - this violates GAAP because it overstates income and cost of goods sold. The assets are overstated due to overstated A/P and income and COGS on the income statement are overstated, creating an overstated net income. Channel stuffing is illegal. In addition, the company didn't realize an allowance for returns (a current liability), even though returns were expected. This is also a violation of GAAP because returns from a certain percentage of retail outlets were expected, so the current liabilities were understated. Channel stuffing would affect net income on the statement of cash flows.

2. Vendor dinging means that the company claimed the ...

Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Basics of corporate finance

These questions will test you on your knowledge of finance.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

View More Free Quizzes
Related BrainMass Solutions

  • As a way to reduce fraudulent behavior in public companies:A

    407174 As a way to reduce fraudulent behavior in public companies 1.As a way to reduce fraudulent behavior in public companies: -violations of GAAP have been declared punishable by death.

  • Auditing: opinions, qualifications, GAAS violations, testing

    This is a departure from GAAP. Since the amount is known, GAAP requires that the amount be reported. Q4. Jane's in big trouble.

  • This post addresses how to report various ietms.

    Information about violations or possible violations of laws or regulations that should be considered for disclosure in the financial statements. j.

  • What is the importance of GAAP to health care organizations?

    A solid corporate compliance program may include such things as a Code of Conduct, written policies and procedures, descriptions of corporate structure (i.e. who has what powers), and written measures to prevent and respond to violations.

  • Health care financial accounting

    A solid corporate compliance program may include such things as a Code of Conduct, written policies and procedures, descriptions of corporate structure (i.e. who has what powers), and written measures to prevent and respond to violations.

  • Motivation and Consequences for Violating GAAP

    When management violates GAAP in terms of the matching principle, it is a direct attempt to increase revenue and/or decrease expenses. Both are violations of GAAP.

  • Setting Accounting Standards.

    Insider trading must be informed, whistle blowing protected, securities fraud liabilities not chargeable to bankruptcy and criminal penalties for violations.

  • SEC Regulation

    The SEC also works together with the Financial Accounting Standards Board (FASB) to investigate accounting violations related to the Statements on Financial Accounting Standards/GAAP.

  • Auditing: CSSC Unqualified Audit Report

    No material violations of GAAP 2. Disclosures are adequate 3. The auditor was able to perform all the necessary procedures 4. There was no change in accounting principles that had a material affect on the financial statements 5.

View More Related Solutions