Purchase Solution

Motivation and Consequences for Violating GAAP

Not what you're looking for?

Ask Custom Question

What is the motivation for violating the generally accepted accounting principle of matching revenues with expenses? What is the result of committing this fraud?

Purchase this Solution

Solution Summary

This solution explains the motivation for violating the matching principle in GAAP. This solution also explains the consequences of committing this violation.

Solution Preview

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. If management is attempting to achieve a certain net income and revenue is not as high as expected in the particular period, management will oftentimes shift expenses. They will delay expenses that have been paid until the next period (when revenue might be higher), or they will move revenue forward that hasn't yet been earned, which should legally be recorded in the next period. By delaying ...

Purchase this Solution


Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.