Case $2$

A few years ago, there was a large oil refining company $($based in New York$)$ whose top executive was convicted of financial statement fraud. One of the issues in the case involved the way the company accounted for its oil inventories. In particular, the company would purchase crude oil from exploration companies and then process the oil into finished oil products, such as jet fuel, diesel fuel, and so forth. Because there was a ready market for these finished products, as soon as the company would purchase the crude oil, it would record