Question: The SEC and Microsoft (Easy)
a. In 1999, Microsoft Corporation announced that the Securities and Exchange Commission (SEC) was investigating some of its accounting practices. Exhibit 18.1 presents the current liability section of Microsoft comparative balance sheet at the end of the first quarter of its 2000 fiscal year. Can you see a reason for the SEC concern?
b. Exhibit 18.1 also gives the cash from operations section of Microsoft cash flow statement for the same quarter. Microsoft reported revenues of $5.384 billion in the quarter to September 30, 1999, and $4.193 billion for the corresponding quarter for 1998.