Discuss the use of each of these three techniques and their effect on current and future earnings reporting.

Part 1

Write: Make sure your response addressing the following question is more than 300 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.

Part 2

Write: Make sure your response addressing the following question is more than 300 words and include an in-text citation from the reading material where appropriate.

Much of cost accounting requires individuals to use their own judgment. Measuring costs is no exception. In your own words, explain why the use of judgment in cost measurement can lead to markedly different results even within the same firm. Would you not think that, at least within their own organization, management could establish some guidelines for ensuring that cost measurement is done primarily the same way by individuals within the organization? If so, how would that be accomplished? If not, why not? Use an example to illustrate your point.