Creativity not encouraged – Don’t take chances with revenue and expense recognition
Abstract: Accounting is time-sensitive. The IRS and Financial Accounting Standards Board (FASB) have established strict cutoffs for recording revenues and expenses. Dealers who are playing timing games to lower taxes or flatter results may find that their creative accounting can come back to haunt them. This article addresses how the rules apply to a variety of different recording situations, and the key role that auditors play in enforcing the rules.