Recording a sale of goods- EPS forecasts

User Generated

trarfvf20

Business Finance

Description

The following is a true case.

General Electric (GE), like many other large corporations, is scrutinized by financial analysts who develop quarterly forecast EPS figures for the company. The companies are under intense pressure to meet or exceed these EPS forecasts. But when earnings fall short, some companies resort to accounting tricks. A few years ago, GE found itself facing this problem. In one case, it "sold" six locomotive engines to a financial institution at year-end with the idea that the financial institution would resell them to GE's regular railroad customers in the first quarter of the following year. GE booked the revenue at year-end, which helped it hit its forecast EPS numbers. Later, upon investigation by the SEC, the transaction was found to be a "sham," or phony transaction, because the financial institutions were not taking over full ownership of the engines. In early 2009, GE was fined $50,000,000 for misrepresenting its financial results.

  • What are the criteria for recording a sale of goods?
Why do company managers feel pressure to meet or exceed EPS forecasts of outside analysts?

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Answers posted please confirm.Kindly go through the work and let me know in case of any question,problem or clarification.In case you find anything that unsatisfactory,just contact me.If the work is satisfactory,looking forward to work with you again.Thank you

Topic: FRAUDULENT ACTIVITEIS


Cover page



Questions Analysis



References


1
Running head: FRAUDULENT ACTIVITY IN ACCOUNTING

NAME
INSTITUTION AFFILIATION
DATE

FRAUDULENT ACTIVITY IN ACCOUNTING

2

FRAUDULENT ACTIVITY IN ACCOUNTING

Fraudulent activity in accounting
Introduction
Accounting in a company ensures transactions related to financial related are recorded
and summarized in a manner that makes sense yet it rarely happens due to personal reasons
related to responsibilities entities. Fraudulent activities in accounting include non-reporting of
financial dealings and overpricing of products for personal gains often evolving from greed. To
be able to be involved in fraudulent activity in an organization there are outside parties who get
invol...


Anonymous
Nice! Really impressed with the quality.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags