I.Issues
Why does net income not equal cash flows?
Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements)
Why do the differences between owners’, players’, GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened?
What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract?
Of what importance are the periodic net income numbers if the clubs can always be sold for huge profits?
How should Bill Ahern resolve the accounting conflict between the owners and players?
How much did the Kansas City Zephyrs Baseball Club earn in
It is important because it will show how profitable a company is over extended periods of time, and how well its business is growing each year. If the club is always making a good profits then the profitability of that club will increase.
How should Bill Ahern resolve the accounting conflict between the owners and players? To answer this question, we need to understand the relationship among the owner’s position, players’ position, the economic truth, and the generally accepted accounting principles(GAAP). The team owners established most of the regulations that governed the industry. They were attached the Major League Rules. These rules decided what the clubs agreed on, including the rules for signing, trading, and dealing with players. Owners are required to elect a commissioner who is a spokesperson for the industry, resolved disputes, and enforced the rules. The other role of the club is to keep track of the financial statements, players’ salary, and bonuses, and to make the right decisions for the sake of the club, and transfer pricing of related operation such as stadium costs. Players’ position is clear here. They play their sports and get paid. Player compensations had been deferred for 10 years. It caused some problems when the issue came to the retired players. Since they were not in the active roster, the club still kept paying them. Players thought that