Discussion Post: Cost Accounting
Accrual Accounting Case Study
Write: Make sure your response addressing the following question is more than 200 words and include an in-text citation from the reading material where appropriate.
Accrual accounting matches revenue with expenses, but accruals can be used to manipulate income and expenses. In the Forbes article Cash Doesn't Lie, author Daniel Fisher discusses the use of negative accruals, changes to estimates, and recognizing income before it is earned.
Read the article and then
a) Discuss the use of each of these three techniques and their effect on current and future earnings reporting.
b) Explain how changes of accounting estimates that significantly affect income should be reported.
• Should they be regarded as a change in accounting principle?
c) Research revenue recognition and discuss the accounting rules violated that brought down the company Sunbeam.
The response must include a reference list. Using Times New Roman 12 pnt font, double-space, one-inch margins, and APA style of writing and citations.