FINAL ROUND
This abuse happens when companies record sales before actually delivering goods to customers
bill-and-hold sales
A company ships $50,000 worth of product on January 2nd, but they record the sale in December. What’s happening here?
cutoff manipulation
A university collects spring tuition in December. When should the revenue be recognized?
A) December, when payment is received
B) January, when the semester starts
C) Spread evenly over the spring semester
D) May, at the end of the semester
C) Spread evenly over the spring semester
This abuse occurs when companies time the recognition of investment gains or losses to make earnings look better.
timing recognition of realized or unrealized gains and losses (gains trading or investment timing manipulation)
This fruit of the Spirit (Galatians 5:22–23) reminds accountants to be patient in recognizing revenue only when earned.
Self-Control and Patience