Publications

November 1999
Background Note

Recognizing Revenues and Expenses: Realized and Earned

By: Robert S. Kaplan

Describes a key concept in financial accounting: choosing an appropriate revenue recognition point. The accrual process requires revenue recognition and expense matching for reporting on the value creation process of companies. Describes the two key criteria for... View Details

Keywords: Accounting Audits; Accrual Accounting; Cost Accounting; Budgets and Budgeting; Revenue; Profit; Cost Management; Value Creation; Competitive Strategy; Financial Statements; Accounting Industry

October 1990 (Revised June 1993)
Case

Taxing Situations: Two Cases on Income Taxes and Financial Reporting

By: William J. Bruns Jr.

Two whimsical situations are described to provide illustrations of situations where income taxes paid differ from the income tax expense that might be included in financial reports. In addition to illustrating that financial reported income may differ from taxable... View Details

Keywords: Taxation; Accounting Audits; Financial Statements; Financial Reporting; Decisions; Accounting Industry; Accounting Industry

August 2000 (Revised February 2001)
Background Note

Expense Recognition

By: Paul M. Healy and Preeti Choudhary

Recording expenses is not often clear-cut and can require considerable management judgment. This case discusses expense recognition in straightforward situations and then considers expense transactions that may be more complex to record. It uses examples that include... View Details

Keywords: Accounting; Cost; Financial Statements

December 1989 (Revised December 1996)
Case

Manufactured Homes, Inc.

By: Krishna G. Palepu

Focuses on analyzing the growth potential of the company using the company's financial statements. View Details

Keywords: Accounting; Financial Statements; Growth and Development

19 May 2003
Research & Ideas

Expensing Options Won’t Hurt High Tech

(One cure for stock option abuse, say proponents, is to change accounting rules so that option grants are reflected in a company's principal financial statements. High-tech start-ups blister at that idea, saying it would harm their... View Details

Keywords: by Zvi Bodie, Robert S. Kaplan & Robert C. Merton

November 2000 (Revised March 2001)
Background Note

Revenue Recognition and Reporting

By: David F. Hawkins

Discusses revenue recognition and reporting rules, guidelines, and issues. A rewritten version of an earlier note. View Details

Keywords: Revenue; Financial Statements; Financial Reporting

16 Sep 2015
Op-Ed

The Real Duty of the Board of Directors

ownership of modern corporations is a central point of our new paper, Materiality in Corporate Governance: The Statement of Significant Audiences and Materiality. Aiming to improve corporations’ public disclosures, we argue that the board... View Details

Keywords: by Robert G. Eccles & Tim Youmans

Article

Financial Statements: Signposts as Well as Milestones

By: Henry B. Reiling and John C. Burton

Keywords: Financial Statements

Find at Harvard

02 Jun 2011
Research & Ideas

Signing at the Top: The Key to Preventing Tax Fraud?

overstatement of expenses. Obviously, many taxpayers give in to the temptation to cheat on their taxes—in spite of the requirement for them to sign a statement declaring that the information on the form is "true, correct, and complete."... View Details

Keywords: by Carmen Nobel; Accounting

April 1996 (Revised May 2000)
Case

Bed Bath & Beyond

By: Amy P. Hutton and James Weber

This case examines how accurately investors have incorporated information about the growth strategy of Bed Bath & Beyond (BBBY) into share price, especially given the changing competitive environment in the housewares industry and the recent Barron's article pointing... View Details

Keywords: Analysis; Valuation; Financial Statements; Consumer Products Industry; Retail Industry

February 2012 (Revised December 2012)
Supplement

Sino-Forest (B)

By: David F. Hawkins

Excerpts from a hedge fund's report accusing a Chinese bond company of using fraudulent financial statements. View Details

Keywords: Financial Statements; Crime and Corruption; Accounting Audits; Business Earnings; Financial Services Industry; China

September 1992 (Revised March 1997)
Case

Summit Distributors (A)

By: William J. Bruns Jr. and Amy P. Hutton

Summit Distributors was in danger of violating loan covenants because of slow economic activity and forecasted losses and was faced with a choice. Changing the inventory valuation method from LIFO to FIFO would avoid default but would require higher future income... View Details

Keywords: Taxation; Cost Accounting; Cash Flow; Interest Rates; Economic Systems; Borrowing and Debt; Financial Statements; Valuation; Accounting Audits; Financing and Loans; Accounting Industry; Accounting Industry

October 2005 (Revised December 2012)
Case

Productos Finas

By: David F. Hawkins

Provides a simple exercise to illustrate consolidation accounting. View Details

Keywords: Consolidation; Accounting; Financial Statements; Corporate Finance

May 1998
Case

Octane Service Station

By: David F. Hawkins

The owner of a gas station must prepare financial statements. View Details

Keywords: Practice; Financial Statements

August 2010 (Revised December 2010)
Supplement

Urban Water Partners (A) (CW)

By: Karthik Ramanna and George Serafeim

The case explores a new venture to bring clean water to Tanzanians who otherwise cannot access or afford it. Management has enough money to get their company through August 2010, but needs more capital. An HBS alum is interested in investing in the company;... View Details

Keywords: Human Needs; Accrual Accounting; Financial Statements; Health Industry; Utilities Industry; Dar es Salaam

18 Jun 2007
Op-Ed

Leveling the Executive Options Playing Field

examining the role of stock options in executive compensation; the incidence of stock option abuses; how stock option compensation is reported to stockholders under generally accepted accounting principles versus how the same compensation... View Details

Keywords: by Mihir Desai

August 2010 (Revised January 2013)
Supplement

Urban Water Partners (B)

By: Karthik Ramanna, George Serafeim and Aldo Sesia

The case explores a new business venture to bring clean water to residents of Dar es Salaam, Tanzania, who otherwise cannot afford it. Management has enough money to get their company through August 2010, but needs more capital thereafter. An HBS alumnus is interested... View Details

Keywords: Human Needs; Accrual Accounting; Financial Statements; Health Industry; Utilities Industry; Dar es Salaam