Final answer:
In the Green Mountain Coffee Roasters case, there was an increase in production and accumulation of excess inventory. Auditors questioned the inventory but determined it was properly accounted for. A class-action lawsuit alleged fraud and scienter, and Green Mountain manipulated inventory resulting in an overstatement of earnings.
Step-by-step explanation:
In the Green Mountain Coffee Roasters case, the following occurred:
- Green Mountain increased production and accumulated excess inventory: This means that Green Mountain produced more coffee than it could sell, resulting in a surplus of inventory.
- Green Mountain auditors questioned the excess inventory but determined it was properly accounted for: The auditors reviewed the excess inventory but concluded that the company had correctly reported and accounted for it.
- A class-action lawsuit was brought against Green Mountain alleging fraud and scienter: Shareholders filed a lawsuit accusing Green Mountain of intentionally misleading them about its financial situation.
- Green Mountain notified investors of excess inventory and assured them they would reduce production: The company informed its investors about the excess inventory and reassured them that they would take measures to decrease production.
- Green Mountain manipulated inventory resulting in an overstatement of earnings: It was discovered that Green Mountain had manipulated its inventory data, leading to an overstatement of its earnings.