Phew, where do I begin? This seemingly simple question has several answers. There's misrepresentation, there's debatable sabotage of the future, there's misleading everyone... yikes. Okay, so. The biggest thing, as far as accounting itself is concerned, is the misrepresentation of the company's true financial health and position. By selling the accounts receivables and liquidating its raw materials inventory, the company begins to appear much more "profitable" than it really is. The increased revenues from such a decision are very misleading, considering the context. The company appears more stable and profitable, whilst nothing business-wise has really changed. Aaaand not only that, think about the future. Brockman just sold a bunch of her company's raw materials inventory. You know, the inventory that they need to make their products? What about in the next period, when production suddenly flatlines because there aren't any materials to make guitars with? Investors are going to want to know what on Earth is going on when there's a very drastic and sudden shift from the prior period where everything seemed so great. And they're not gonna be happy when they discover the truth. It's either screwing over the investors and purchasing more materials (drastically reducing profits), or purchasing cheaper, lower-quality materials... which means lower-quality products (screwing over customers). respond to post