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Debtor wants to Overstate Revenues

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If a debtor wants to overstate revenues, how might he do this without actually reporting non-existent income?

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Solution Summary

Your response is 205 words and gives three ways that you can overstate revenues without reporting non-existent transactions or revenue.

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Most of the ways are to exaggerate sales related returns or the timing of recognizing revenue on actual transactions. Here are some examples of each of these two ways.

Exaggerate sales returns and allowances.

GAAP requires that in the period of sale, businesses remove from sales (as a contra sales account) an estimate for sales that will be return or ...

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Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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