1. In the case of Edison Schools, explain why the SEC issued an AAER even though it did not find that Edison's revenue recognition practices did not contravene GAAP.

2- Describe and compare Lockheed's capitalized development costs and Livent's capitalized preproduction costs.

3. Why is a decreasing sales-to-PPE ratio a signal of possible overstatement of assets?

4.If a company sells a significant portion of its accounts receivable, what adjustments must you make to CFFO before testing whether the financial statements contain signals of overstatement of earnings? Explain why these adjustments should be made.

5. Explain why downsizing a company by closing segments or product lines that report an accounting loss often leads to a decrease in profits rather than an increase.