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WorldCom – The fraud Navin Bafna GMBA08A125 Investment Banking
The Background – WorldCom ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Business style  -  Ebbers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The  Problem – Recession 2000 ,[object Object],[object Object],[object Object],[object Object],[object Object]
Accounting Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object]
Expense Capitalization ,[object Object],[object Object],[object Object],[object Object]
Fraud ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Example
                                    270000   270000     150000   150000                     90000 Cash - hand               50000 Shares 20000 MR X Debtor           40000 Expenses 50000 Shares   25000 Dividend Recd 34500 Profit 50000 Plant 25000 Dividend       12000 Depreciation 30000 Goods  75000 Loan   25000 Profit on sale-shares 53500 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts    Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               243000   243000                               80000 Debtor X's 13500 Accruals           90000 CASH 20000 CREDITORS           25000 Shares 34500 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     1   BALANCE SHEET
                                    270000   270000     150000   150000                     90000 Cash-hand               50000 Shares 20000 Mr. DEBTOR           40000 Expenses 50000 Shares   25000 Dividend Recd 48000 Profit 50000 Plant 25000 Dividend     Profit on sale MCH 12000 Depreciation 30000 Goods  75000 Loan   25000 Profit on sale-shares 40000 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts    Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               243000   243000                               80000 Debtor X's               90000 CASH 20000 CREDITORS           25000 Shares 48000 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     2   BALANCE SHEET
                                    270000   270000     150000   150000                     90000 Cash - hand               50000 Shares 20000 Mr.X DEBTOR           40000 Expenses 50000 Shares   25000 Dividend Recd 88000 Profit 50000 Plant 25000 Dividend     Profit on sale MCH 12000 Depreciation 30000 Goods  75000 Loan   25000 Profit on sale-shares   =0.00 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts    Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               283000   283000                               40000 EXP CAPITALIZATION               80000 Debtor X's               90000 CASH 20000 CREDITORS           25000 Shares 88000 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     3   BALANCE SHEET
[object Object]

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WorldCom Fraud Capitalized Expenses

  • 1. WorldCom – The fraud Navin Bafna GMBA08A125 Investment Banking
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 9.                                     270000   270000     150000   150000                     90000 Cash - hand               50000 Shares 20000 MR X Debtor           40000 Expenses 50000 Shares   25000 Dividend Recd 34500 Profit 50000 Plant 25000 Dividend       12000 Depreciation 30000 Goods 75000 Loan   25000 Profit on sale-shares 53500 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts   Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               243000   243000                               80000 Debtor X's 13500 Accruals           90000 CASH 20000 CREDITORS           25000 Shares 34500 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     1   BALANCE SHEET
  • 10.                                     270000   270000     150000   150000                     90000 Cash-hand               50000 Shares 20000 Mr. DEBTOR           40000 Expenses 50000 Shares   25000 Dividend Recd 48000 Profit 50000 Plant 25000 Dividend     Profit on sale MCH 12000 Depreciation 30000 Goods 75000 Loan   25000 Profit on sale-shares 40000 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts   Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               243000   243000                               80000 Debtor X's               90000 CASH 20000 CREDITORS           25000 Shares 48000 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     2   BALANCE SHEET
  • 11.                                     270000   270000     150000   150000                     90000 Cash - hand               50000 Shares 20000 Mr.X DEBTOR           40000 Expenses 50000 Shares   25000 Dividend Recd 88000 Profit 50000 Plant 25000 Dividend     Profit on sale MCH 12000 Depreciation 30000 Goods 75000 Loan   25000 Profit on sale-shares   =0.00 Expenses 10000 Furniture 100000 Capital   100000 Sales 50000 Purchases                   Amount Payments Amount Receipts   Amount Income Amount Expenses Cash Flow   Income and Expenses A/c                                               283000   283000                               40000 EXP CAPITALIZATION               80000 Debtor X's               90000 CASH 20000 CREDITORS           25000 Shares 88000 PROFITS           40000 PLANT & MCH 75000 LOANS           8000 FURNITURES 100000 CAPITAL                     3   BALANCE SHEET
  • 12.