Financial accounting individual

Financial accounting individual - Summary China has gone...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Summary China has gone through major economic innovation within two decades, but because of the fast changes, the rules and regulations of the accounting systems were not clearly settled and organized. This poor accounting system have created loopholes for companies to practice fraud for the stakeholders and became one of the major issues of China. This summary will be about some of the case studies about the accounting fraud practiced in China, the impact of these frauds to the stakeholders and to the China society. There are seven different cases shown about accounting fraud in this article. There are a few typical creative accounting and fraud shown in these seven different cases which are, inflating profit and assets, bribery, and embezzlement of raised funds. Zhengzhou Baiwen is the typical example of inflating profits and assets. The method that Baiwen chose in order to inflate its profit is to create fake sales. Firstly, Baiwen found a company that will allow them to record credit sales even though there wasn’t any transaction between these two companies. Then, Baiwen inflated its actual sales, which in 19.08 million RMB to 143.9 million RMB. Also, Baiwen carried out creative accounting which is to inflate account receivable from 49 million RMB to 911 million RMB. The effect of carrying out such a fraud is to attract and implement the idea to the stock buyers that their outstanding performance will eventually lead to profit for the stockholders and incite the stock buyers to purchase the stocks with high price even though the stock doesn’t carry any value.
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '16
  • Creative accounting

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern