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Financial Statement Restatement Paper

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Financial Statement Restatement Paper
ACC537
April 13, 2015

Financial Statement Restatement Paper
Most companies in the world use accounting principles to help them manage their cash flows that occur on a daily basis. It would be impossible for large companies to function without having an accounting department that measures all the data and ensures the company is profitable. Every transaction that occurs in the company needs to be recorded in an appropriate account to reflect everything that the company does. With so many transactions that occur on a daily basis, companies are prone to making an error in their accounting practices. Most of the time, the errors that occur are not discovered until a few years down the road. This can have a negative impact on the company because they are reporting incorrect data. In this paper, I will discuss Bridgestone Education Inc and the errors that they found in their accounting principles. I will analyze the accounting principles involved in the error; the effect of errors and changes on the financial statement, and the effect the errors have on the stockholders.
In the year 2014, Bridgestone Education Inc released a statement claiming that they are looking into the accounting practices of the previous years because they found an error in the reports. According to “Street insider” (2014), “Management has concluded that there are material weaknesses in internal control over financial reporting, as we did not maintain effective controls over the selection and application of accounting principles generally accepted in the United States (“GAAP”) related to revenue recognition and restricted cash.” (Bridgepoint Education (BPI) to Restate 2013 Financial Statements). The error that occurred in the financial statements for the year ended December 31, 2013 is an error in analyzing the collectability criterion for revenue

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