The July 28, 2007, issue of the Wall Street Journal includes an article by Kathryn Kranhold entitled “GE’s Accounting Draws Fresh Focus on News of Improper Sales Bookings.”

Instructions Read the article and answer the following questions.

(a) What improper activity did the employees at GE engage in?

(b) Why might the employees have engaged in this activity?

(c) What were the implications for the employees who engaged in this activity?

(d) What does it mean to “restate” financial results? Why didn’t GE restate its results to correct for the improperly reported locomotive sales?

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