An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Themin Suwardy
Singapore Management University

Abstract: This case uses the concept of earnings quality in financial management to demonstrate the inherent ambiguity in the earnings measurement process. Students in accounting are often more accustomed to mechanical, procedural and numerical correctness. Many excel at financial ratio calculations without knowing how the numbers are prepared. This case offers the story of Oriental Foods, a well-run, conservative family business that seeks expansion and thus re-examines its accounting policies, as a suitable framing concept to demonstrate that earnings are often ambiguous and highly influenced by management decisions. In addition, where most cases in this area is easily identified with a character that obsessively advocates a “big bath” or inflating profits, characters in this case truly believes in their views on the appropriate accounting principles to adopt.

Back to Session Listing

AAA Home Page