Accrual Accounting Case Study [WLO: 1] [CLOs: 1, 2, 6]

Prior to beginning work on this discussion, read Chapters 1, 2, and 3 in the textbook.

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 (Links to an external site.), author Daniel Fisher discusses the use of negative accruals, changes to estimates, and recognizing income before it is earned. Read the article and then

• Discuss the use of each of these three techniques and their effect on current and future earnings reporting.
• Explain how changes of accounting estimates that significantly affect income should be reported.
  • Should they be regarded as a change in accounting principle?
• Research revenue recognition and discuss the accounting rules violated that brought down the company Sunbeam.

Guided Response: Respond to at least two of your classmates by commenting on their posts. Though two replies are the basic expectation for class discussions, for deeper engagement and learning you are encouraged to provide responses to any comments or questions others have given to you. Continuing to engage with peers and the instructor will further the conversation and provide you with opportunities to demonstrate your content expertise, critical thinking, and real-world experiences with the discussion topics.