Cosmetic Accounting/ Creative Accounting

Cosmetic Accounting/ Creative Accounting Essay example
Finance & Accounting
Pages 9 (2259 words)
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• An overview of the concepts of cosmetic accounting.
• Cosmetic accounting as blessing or curse.
• Causes of Cosmetic accounting.
• Techniques of cosmetic accounting.
• Effects of Cosmetic accountings.
• Solutions of Cosmetic accounting.


An overview of the concept of cosmetic accounting:
Cosmetic or creative accounting is a process where accountant use their knowledge about accounting rules to change or manipulate the reported figures of the company’s business accounts. Cosmetic accounting can be describe in different ways like it is referred as the terms of income smoothing , earning management , earning smoothing or somewhere as financial engineering. The term cosmetic accounting is used when ,accepted accounting techniques those are not allow to use as to report financial results of a company, and with the help of creative accounting those prohibited techniques are used to manipulate accurate picture of the company. The methods of creative accounting are noteworthy because they remain in use as generally accepted accounting principal. As an author every company is fiddling its profit, every sets of published accounts are based on books which have been gently cooked or completely roasted. This deception is all in perfectly good taste. It is creative accounting. (Griffiths 1992:1)
Creative accounting also based on some unethical elements like as accounting details of a restaurant can be anything (true and fair). The creativity in such details is like showing a half glass of water as half-full instead of presenting it as half-empty. Both statements are correct but both can paint different pictures and create different images in user’s mind.
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