First of all,
# The Company WorldCom was engaged in acquiring various companies due to which the company was at high pace & large stock.
Secondly,
# Companies which are acquired by WorldCom were following different accounting systems as compared to WorldCom. So,financially difficult situation.
# Company was also engaged in Frauds like :
1. Making the NET INCOME look better means they were showing their goodwill, less expenitures, more revenues, tax escape, increased profits etc.
2. They were treating $7 billion of their Line Costs as Capital Expenditures means rent that should paid to the other companies for phone lines were treated as capital expenditures.
# The Company WorldCom was engaged in acquiring various companies due to which the company was at high pace & large stock.
Secondly,
# Companies which are acquired by WorldCom were following different accounting systems as compared to WorldCom. So,financially difficult situation.
# Company was also engaged in Frauds like :
1. Making the NET INCOME look better means they were showing their goodwill, less expenitures, more revenues, tax escape, increased profits etc.
2. They were treating $7 billion of their Line Costs as Capital Expenditures means rent that should paid to the other companies for phone lines were treated as capital expenditures.
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