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Financial Shenanigans, Fourth Edition: How to Detect Accounting Gimmicks & Fraud in Financial Reports, 4th Edition by Yoni Engelhart, Jeremy Perler, Howard M. Schilit

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3

Earnings Manipulation Shenanigan No. 1: Recording Revenue Too Soon

Thirty days has September,

April, June, and November;

Of twenty-eight there is but one,

And all the rest have thirty-one.

—A MODERN VERSION OF THE FIFTEENTH-CENTURY MEDIEVAL BRITISH RHYME

As young children, many of us were taught this useful rhyme to help remember the number of days in each month. Frankly, it still comes in handy as a reminder well into our adult years. It was much later in life though when we realized that February was not necessarily the only exception to the 30- or 31-day rule. In fact, every month could be the exception for a company that wishes to inflate its revenue. Computer Associates (CA) had become the poster child for this revenue inflation trick, ...

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