Question
When the shareholders of Ann Taylor Stores, a national retailer of upscale women's clothing, brought suit against company management, the company was accused of misleading
When the shareholders of Ann Taylor Stores, a national retailer of upscale women's clothing, brought suit against company management, the company was accused of misleading investors by hiding the fact that it had accumulated huge amounts of excessive and overvalued inventory. Although the company reported disappointing results, surprising Wall Street, management denied any wrongdoing. The financial press often reports incidents where management uses inventory accounting to manipulate earnings. Discuss important topics and considerations related to inventory accounting. How does inventory accounting influence the financial statements (be specific). How do these topics individually affect shareholders, creditors, managers, and auditors?
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