Imagine that Commodore has taken out a multi million dollar loan that must be repaid next year. How might the lender react if it learned that Commodore was using the book-and-hold method to make revenues look higher than they really are?

Will sales and profits meet the expectations of investors and Wall Street analysts? Managers at public corporations must answer this vitally important question quarter after quarter, year after year. In an ideal world—one in which the economy never contracts, expenses never go up, and customers never buy competing products—the corporation’s share price would soar, and investors would cheer as every financial report showed ever-higher sales revenues, profit margins, and earnings.