AOL Pays Millions in Accounting Mishap

On Monday, America Online agreed to pay $3.5 million in civil damages based on improperly accounting for advertising revenues. The case also marks the first time the Securities and Exchange Commission has levied its power on a public company for capitalization matters.

The case dates back to profits in six of eight quarters during 1995 and 1996 that were listed as deferred revenue instead of associated with acquiring new customers to use company services.

Analysts say the action taken by the SEC clearly says that anyone conducting business via the Internet should prepare their financial statements in present scenarios rather than basing the reporting on the future.


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