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    Accounting: Balance sheet and Fraud.

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    Consider this:

    A "...balance sheet provides the needed information about the company's financial situation which in turn can help the decision makers to act according to the data given".

    Can accounting practices conceal the true state of a firm?

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    Solution Preview

    A balance sheet is a financial statement that shows the assets, liabilities and equity, of a firm, at any particular period. The balance sheet is always prepared according to a set number of practices. Accounting practices are the sum of all practices that a firm uses in preparing its financial statements.

    However to some extent some firms can manipulate some practices in order to change the true nature of the firm's performance. This means that firms may change the manner in which some of the practices are used.

    1. Changing revenue recognition standards: Revenue recognition deals ...

    Solution Summary

    The problem deals with discussing how firms might use the balance sheet in a fraudulent manner.