achievement of E/R ratio. However, the industry began to deteriorate in 2000 due to economic recession and other reasons, such as overcapacity and heightened competition. Despite the falling in revenue, the management of WorldCom tend to manipulate the accounting entries by accrual releases and capitalization of line cost in order to achieve the targeted performance. The scheme lowered line costs (the company’s largest single expense) by capitalizing them as “prepaid capacity” and reversing allowances without
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obligation for both entities to go forward with the deal, it does not guarantee completion of the deal. The acquisition agreement typically contains a warranty by the target that its financial statements are prepared in accordance with generally accepted accounting principles (GAAP). If this warranty is breached, the deal can be terminated. We hypothesize that low-quality financial reporting by target firms prior to the announcement of a deal increases the likelihood that a target firm’s U.S. GAAP warranties
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0 1 2 3 4 5 6 7 8 9 10 Sales (units) 30,000 34,000 38,800 38,000 36,000 36,000 35,500 35,000 34,500 34,000 Adjusted Sales Price 1,000 1,000 1,000 950 950 950 950 900 900 900 Revenues 30,000,000 34,000,000 38,800,000
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Financial statements are based on historical costs and as such the impact of price level changes is completely ignored. They are interim reports. The basic nature of financial statements is historic. These statements are neither complete nor exact. They reflect only monetary transactions of a business. The following limitations may be noted: 1. The financial position of a business concern is affected by several factors-economic, social and financial, but financial factors are being recorded in these
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I will discuss in this essay. Tangible non-current assets are usually valued by using the historical cost, which is the initial cost of acquiring the asset to the company. The IFRS states that the historical cost of an item not only includes the price paid for it, but also “any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.” This includes transportation and labour costs, and the cost
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Table of Contents 1.1 Accounting Concepts Definition............................................................................................... 2 1.1.1 Business Entity Concept ........................................................................................................ 5 1.1.2 Money Measurement Concept ............................................................................................... 6 1.1.3 Going Concern Concept ....................................................
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sensitivity analysis gives the result of how sensitive the Black-Cox model is in choosing different barriers, in the relation with asset volatility and debt level. Furthermore, the models are applied to real companies with different leverage ratios, which shows that structural models are more dynamic and accurate than traditional accounting based methods. Particularly, we applied the model to a recently defaulted company OGX Petr and the model shows a strong predicting capability in the default risk
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Presentation and disclosures (or Classification and understandability) Records completeness, accuracy, cut-off (correct accounting period) Obligation (or rights and obligation) Valuation and allocation Existence Audit Procedures What are some of the typical audit tests? Confirming compliance with law and accounting standards Reviewing notes for understandability Reviewing of post year-end items Cut-off testing Analytical review Confirmations
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THE ROLE OF ACCOUNTING TEXT REFERENCE: Hoggett, J.R., Edwards, L., & Medlin, J., Accounting in Australia, Fifth Edition, Chapter 1. OBJECTIVES: When you have studied this chapter, you should be able to: 1. understand the nature of decisions and the decision-making process. 2. appreciate the wide range of economic decisions made in the marketplace. 3. explain the nature of accounting and its main functions. 4. identify the potential users of accounting information.
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Ethical Issues in Business and Accounting Assignment #6 for Professor Gates By Nicholas Gainsbrugh Overview of the Australian Accounting Standards Board and Harmonization with IFRS Nicholas Gainsbrugh Unit 6 Assignment for Prof. Gates Assignment: An Overview of the Australian Accounting Standards Board and Harmonization with IFRS Abstract: The accounting profession in Australia is thriving. The number of accountants employed at the professional level has risen strongly over the past
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