Good reasons for clean cutoffs

Description

Abstract: When a sale occurs near the fiscal year end, precisely when should a dealer record it? For a sale in which the dealer had completed most of the legwork and crunched the numbers just before the cutoff date — but with the dotted line being signed after that date — it might seem logical to record it at the earlier date. And the factory would likely back this decision, because it bolsters the manufacturer’s year end unit sales. But dealers shouldn’t count their chickens before they hatch; it can cause problems with lenders and other stakeholders, who might claim that the dealer is exaggerating financial results.