Creative Accounting (A Guide to Accounting Fairness Practices)

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Features: This book aims to provide a general perspective on the field of accounting judgment, highlighting the methods by which business managers and accountants manipulate accounting results to achieve specific purposes. Chapter 1 introduces the general concepts of accounting principles and accounting concepts, including the uses of financial statements and the close connection between the income statement and the balance sheet through accounting procedures. Chapter 2 covers the responsibilities of stakeholders related to "true and fair" accounting, as well as the roles and responsibilities of directors, auditors, and accounting professional groups. Chapters 3, 4, and 5 comprehensively explore the methods of manipulating accounting profits through creative accounting, covering traditional profit "smoothing" techniques such as inventory and bad debt reserves, as well as relatively newer and more popular methods like sales loading and revenue swapping. Chapters 6 and 7 discuss controversial asset valuation issues, revealing how accounting thought has shifted from traditional historical cost to the concept of "fair value," and the potential impact of this change on accounting judgment and financial result manipulation. Chapter 8 focuses on the other side of the balance sheet—liabilities—and discusses the hot issue in the aftermath of the Enron scandal—how debt is shifted to "off-balance sheet." Chapter 9 examines judgment and complexity in "business combinations" accounting, as the increasing number of companies forming joint ventures and strategic alliances, along with the rise in traditional mergers and acquisitions, has made this section particularly important. The final chapter focuses on the state of accounting in the "post-Enron" era and discusses potential future developments. The book is interspersed with many real-world cases of creative accounting, where the older cases illustrate that creative accounting is not a new issue, while most of the cases were discovered within 12 months after the Enron scandal became headline news, making creative accounting a hot topic once again. This book is suitable for all financial and non-financial managers who want to understand the nature of creative accounting, and is particularly suitable for those responsible for preparing accounting statements and analyzing published financial statements. It will be helpful to anyone who wants to understand the judgmental aspects of financial measurement and wants to know the potential for profit manipulation. Its comprehensive and practical nature demonstrates to managers the skill and ability of MTP in providing users with favorable and effective knowledge.