Angela Channing, owner of Eagle Crest breweries, owns four breweries located throughout California and Oregon. Each brewery is run as an independent business which allows the manager of that brewery to control its operations and arrange for sales to its own customers. Each brewery has an accountant responsible for preparing financial statements for the brewery. The accountant reports to the brewery manager. Angela recently revamped the compensation policy for brewery employees which grants bonuses based on financial results of their own breweries based on sales from that brewery. Angela believes the sales numbers for one of the breweries has been inflated. She asks your accounting firm to analyze the financial statements (balance sheet, income statement) for that brewery to determine whether her suspicions have some foundation. She provides the statements for that brewery for the last three years.

What types of accounting anomalies would you look for? 

Assume sales have been inflated. Provide two recommended.

Answer rating: 100% (QA)

When analyzing the financial statements to determine if sales have been inflated there are several a... View the full answer