An example of an accounting gimmick is Creating Sham Rebates. In my book which explains this, it states an example: A company agrees to buy $100M in inventory in the next year and has the supplier agree to a $5m rebate. This rebate is recorded as a reduction in the current year's cost of goods sold. This will boost the company current period earnings. The proper accounting would be to net this rebate against the inventory balance, when the actual inventories are bought."
I'm not sure how sham rebates help boost the bottom line since the net results (i.e. profits) are the same.
In the first case, the earnings are $Rev - $100M +$5M. In the second case, this is $Rev - $95M, which is the same results as the first case. Please clarify how sham rebates help boost earnings.