Detecting Accounting Fraud 1st Edition by Cecil Jackson

Exercise 5

Which of the following correctly describes the SEC's finding against Edison? (a) Edison's revenue recognition practices did not contravene GAAP, but failed to present an accurate picture of the issuer's financial condition.
(b) Edison's recognition practices contravened GAAP.
(c) Since the issuance of the guidance of EITF 01-14 in 2002, if a company is the primary obligor for an expense, it must report revenue net of expenses that are deducted from those revenues before payment is made to the entity.
(d) The net income reported by Edison in its income statement was incorrect.