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Major accounting problems related to interim reports

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Interim reporting:

A. What are accounting issues related to reporting quarterly?

B. What problem does quarterly (interim) reporting create for income taxes?

C. What does GAAP require?

D. Research attempts to predict next year's income from interim reports, but rarely with success. What is it so hard to predict using interim reports?

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Solution Preview

A few years ago, a publishing company in the fourth quarter had a net profit figure that exceeded sales for that quarter. Such a situation as this suggests that some difficult accounting issues are involved in interim reporting.

Expert: All kinds of gains might have been booked in the fourth quarter than could have created profits larger than sales. Profits can come from non-customer transactions, such as gains on the sale of a business segment, and can be massive.

(a) What is the major accounting problems related to interim reports?
Expert: The major accounting problem is the intra-period ...

Solution Summary

Your discussion is 443 words and two references and explains the difficulty with many examples, of having each quarter representative of the other quarters in interim reporting.