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Essay example - Cosmetic Accounting/ Creative Accounting

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Cosmetic Accounting/ Creative Accounting Essay example
Masters
Essay
Finance & Accounting
Pages 7 (1757 words)
This research paper gives an overview of the concepts of cosmetic accounting. It will discuss whether the cosmetic accounting as blessing or curse. Further, it will stop on causes of cosmetic accounting, techniques of cosmetic accounting and its effects…

Extract of sample

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 described 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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