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Essay / Research Paper Abstract
A 20 page paper discussing Microsoft’s approach to what it terms conservative accounting. The company recently abandoned the use of stock options to inflate earnings reflected on its balance sheet, but it still practices “cookie jar” reserves to smooth out business results year to year. The paper discusses the issue of these items, and at least one accountant’s view of Microsoft as the purveyor of massive financial fraud. Bibliography lists 13 sources.
Page Count:
20 pages (~225 words per page)
File: CC6_KSacctMScookJar.rtf
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Unformatted sample text from the term paper:
of New York hosted a Corporate Governance conference in December 2000. Former Securities and Exchange Commission (SEC) chairman Arthur Levitt was the keynote speaker, appearing shortly after the SEC
had required restatement by the first 100 companies identified by the SEC as having questionable accounting practices. Levitt announced that "no market has divine right to investors capital," and
that the SEC was requiring publicly traded companies to more fully report financial results. Microsoft was not among those being required to restate
earnings, but its approach to the conservative accounting it takes pride in eventually would be investigated nonetheless. As it kept its corporate hand inside the "cookie jar" it used
to smooth reported business results from year to year, it also retained the use of the stock option that had become synonymous with the technology sector. The company recently
announced that it would discontinue the use of stock options, but it apparently still uses the cookie jar reserve, one of the "five practices identified by the then Securities and
Exchange Commission chairman Arthur Levitt in 1998, when he launched a drive against creative accounting" (Hill and Michaels, 2002; p. 29). The purpose here is to assess Microsofts approach
to accounting, much of which is exemplified in the use of the cookie jar. Microsofts Approach Microsoft has taken pride in the past
in the fact that it practiced what it and others termed "conservative" accounting. The implication is that the company adheres to the narrow definitions of the rules of accounting
convention, not stretching application beyond generally accepted definition and practice of entities and accounting tools as defined by the Financial Accounting Standards Board (FASB). It has taken at least
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