Perpetrators of improper revenue recognition schemes often attempt to offer the defense that recognizing future periods’ revenue in the current period is only a “timing” error. Discuss whether the fact the over stated revenue will likely be earned in later periods reduces the impact of the overstatement or reduces the responsibility of the perpetrator to report revenue accurately in the current period. Why is an “increase in accounts receivable as a percentage of sales” a signal of improper revenue recognition?
Support your answer using both the required text and external resources, addressing the key points (concerns). Responses should be unique and incorporate your personal perspectives that are supported by reading and research. Initial comments should be 1-2 paragraphs in length for each point. Follow-up postings should not exceed a paragraph and should add additional information or perspective to the original author’s comments.