Microsoft – Accounting Analysis Case Study Analysis
This can be done by understating the research expenditures, overstate revenue by purposely recording the unearned liability as revenues or fail to record the cost associated with the revenue earned in the period the service or product is offered i.e. not complying with the matching principle.
The unexpected large receivable write-offs in the last year were explained by the adoption of the new standard pertaining to revenue recognition. In addition, a qualified audit opinion has been provided which indicates that the organization’s reported earnings reflect its true economic performance as detailed disclosure for unusual changes and each line of the item has been provided and comply with the accounting policies of the organization. (Microsoft Annual Report, 2018)
Conclusion:
It is concluded that the organization’s financial statements and reported earnings reflect the underlying economic performance of the business as the audit report is qualified, explanations for odd entries and unusual changes have been included in the notes to the financial statements along with information related to accounting policies, changes in accounting estimates and off-balance sheet items.......................................
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