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Describes a dispute between the owners of the major league baseball teams and the players' union about the profitability of the baseball teams. The issue is important because of the ongoing collective bargaining negotiations. A consultant is brought in to decide whether a representative team, the Kansas City Zephyrs, is making or losing money. He has to settle a number of accounting disputes about roster depreciation, signing bonuses, deferred compensation, and stadium costs.

No matter what their business, managers need to know how much cash they have to pay their obligations. Unfortunately, some of the cash flow measures they usually use to check their cash position--including net income plus depreciation (NIPD) and earnings before interest and taxes (EBIT)--only work when sales are steady. When sales skyrocket, the measures overestimate cash; when sales plummet, they underestimate cash. A new concept, net operating cash flow--double prime, more clearly indicates the position of a company's cash bottom line.

Canada's largest chemical company produces and markets butyl rubber in two divisions, each treated as a profit center. The new plant in the North American Division operates below capacity resulting in a significant volume variance and an operating loss. The European Division is at capacity and is profitable. The actions of the European Division affect the capacity utilization of the North American Division. Includes divisional financial statements and interviews with the vice-presidents of each division.

In many companies, corporate accountants preparing financial statements face intense deadline pressure. Using standard methods of allocating selling, general, and administrative (SG&A) expenses is a quick and easy way for them to calculate nonmanufacturing costs for different product lines. But management pays a price when company accountants take this shortcut. To allocate SG&A costs properly, controllers need to compile all expense data to produce a precise breakdown of all expense categories for each product line. The next step is to incorporate this information into the annual financial plan, with the goals of making fair and reasonable cost allocations.

Without a system to measure goals and performance, managers of nonprofits often mistakenly continue with projects that no longer serve organizational goals or start activities of questionable usefulness just because there's money in the till. They tend to fear accountability and think that systemizing their organization will take the romance out of their mission. But only when nonprofits institute and rigorously maintain a system of standards will they become purposeful, effective, and efficient.

In this exercise, the owner and sole proprietor of an art importing business must prepare a statement of changes in financial position.

In this exercise, the owner and sole proprietor of an art importing business must prepare a statement of changes in financial position.

The owner and operator of Merlin's Magic Mansion must attempt to reconcile his books to the bank statement. The bookkeeper has disappeared and the owner must determine the cash position of Merlin's Magic Mansion.

Describes a company that had problems of fraudulent financial reporting. Provides an opportunity to discuss the roles of top management, financial management, internal and external auditors, and the audit committee of the board of directors in such circumstances. The problems relate to premature revenue recognition, inadequate reserves for inventory obsolescence, and possible insider trading.

Pinnacle Mutual is one of the largest mutual life insurance companies in the world. Offering a full range of financial services, it competes with a broad group of financial service providers. In an effort to compete more effectively, Pinnacle adopted GAAP accounting and established profit centers in 1985. The case contains a description of the processes used to create profit centers and some of the implementation problems that were encountered.

The first in a series of cases that explores the causes and methods of fraudulent financial reporting and the lines between acceptable, unethical, and fraudulent behaviors.

Describes events occurring over a four-year period in one division of Graves Industries. The division goes through a business cycle and uses several methods of managing earnings to meet its budget targets. The purpose of the case is to allow the exploration of the causes of the unethical (or fraudulent) behaviors and ways in which they could have been prevented, or at least detected more effectively.

Describes events occurring over a three-year period in a division of Graves Industries. The division is being squeezed for profit, and managers in the division get involved in some fraudulent financial reporting schemes involving revenues and capitalization of expenses. A number of issues are raised concerning causes of the frauds and methods of preventing and/or detecting them.

Mueller-Lehmkuhl sells apparel fasteners and rents attaching machines. It views these two products as effectively a single item and prices them accordingly, the fasteners at high profit and its attaching machines at a loss. The cost system allocates the cost of the attaching machines to the fasteners. The Japanese have entered the market and found a way to unbundle the two products. As a result they are challenging the European way of doing business. The case asks the student to analyze the true cost and profitability of the products.

At the end of the budget cycle, the manager must test whether plans are feasible given financing arrangements and constraints. Cash needs are great due to seasonality. Needed loans must be calculated at five separate dates, and financial position projected. This is a rewritten version of Hanson Industries (B) and (C).

This note focuses on the decision rules and guidelines managers use in recognizing revenue and measuring income in the preparation of periodic financial statements. This note considers issues only partly considered by the Canadian Institute of Chartered Accountants and the Financial Accounting Standards Board in the United States.

This note focuses on the decision rules and guidelines managers use in recognizing revenue and measuring income in the preparation of periodic financial statements. This note considers issues only partly considered by the Canadian Institute of Chartered Accountants and the Financial Accounting Standards Board in the United States.

Describes a conflict between the corporate controller and a division president about labor standards, which the division purposefully overstates to protect its margins. Illustrates the multiple roles of standards, and the roles of controllers and line management in resolving such conflicts.

Spreadsheet Supplement for case 186136.

Presents an analysis of Harnischfeger's quality of earnings, and the investment potential of the company's stock in light of the company's turnaround strategy.