Principles of Financial Accounting

The Assignment (YOU DO NOT HAVE TO DO THE ASSIGNMENT ITSELF, ONLY RESPOND TO STUDENT POSTS, BASED ON THE ASSIGNMENT!)

Companies often try to manage earnings by recognizing revenue before it is actually earned according to GAAP, or by deferring expenses that have been incurred. For example, to meet the targeted earnings for a specific period. A company may capitalize a cost that should be expensed. Read the following scenario and then decide how you would handle this opportunity to manage earnings.

You are a division manager of a large public company. Your bonus is calculated on your division's net income targets that you must meet. This year that target is $1.5 million. You are authorized to sign off on any decision made within your division. You are faced with the following situation:

On November 15, your division of the company ordered $150,000 worth of supplies in anticipation for the seasonal rush. Most of these supplies will be used by year-end. These supplies were delivered on November 30. If you record this expense this year, your net income will be $1.45 million and you will not meet the target, and therefore not receive your bonus of $25,000 that you have worked hard for all year.

What would you do and why? (1 to 2 paragraphs)

Suggestions for Responding to Peer Posts

• Compare and contrast your peer's response to your own. Were there any similarities or differences?
• Were the reasons your peer gave for his or her decision ethical and professional?

How you should respond to students' posts:

Your DB assignment and your comments to classmates should be critical and meaningful.

• Include detail and specific content
• Illustrate critical thinking
• Relate the learning to the class readings
• Create opportunities for discussions that lead to fuller understanding of the subject matter
• Use credible sources to support positions
• When agreeing with postings of classmates, give specific information that supports the concept
• When disagreeing with postings of classmates, give specific information illustrating the credibility of the disagreement
• Constructive debate using proof to support points
• Reflective thinking should be displayed in responses
• Incorporate pertinent real-life experiences (optional)
• The mechanics, grammar, spelling and structure should be accurate, logical, and clear

Discussion Board Grading Criteria: "A" - Answer the question fully and intelligently, providing meaningful responses to classmates and use the text as support. To earn a high A, you must site external research sources, make reasonable inferences, and/or use a real world example. Responses are posted within the allotted timeframe and are written at a college-level.