What is creative accounting, Financial Management

Assignment Help:

What is Creative accounting

Creative accounting (also termed as aggressive accounting or earnings management) distorts financial analysis of company accounts. Creative accounting is done by organisations to perhaps enhance balance  sheet  or  performance  by  either  exploiting  loopholes in  the  accounting  standards or deliberately  not  showing  certain  items.   Listed  companies  specifically have  added  pressures  for  the maintenance  and  increase  of  share prices; this  obviously  has  an  influence  on  the  valuation  of  company.   As  share  prices  are  stipulated  by  the  market,  information  fed  to  market  can  be manipulated to ensure this.

There has been a severe crackdown on misleading accounts specifically with the disasters such as Enron and WorldCom.   In  USA  there  are  now  huge  financial  penalties  and  even  jail  sentences  for directors deliberately misleading users the accounts. In UK directors are legally obliged to produce true and fair accounts.

 


Related Discussions:- What is creative accounting

Value of a warrant, Value of a Warrant: The market price of a warrant f...

Value of a Warrant: The market price of a warrant fluctuates between minimum and maximum limits. When the current market price of the stock Ps is greater than the exercise pri

Securitization, Securitization -Source of financing whereby an entity's ASS...

Securitization -Source of financing whereby an entity's ASSETS (characteristically mortgage loans, lease obligations or other kinds of RECEIVABLES) are placed in a special purpose

Define how earnings available to common stockholders, Define how earnings a...

Define how earnings available to common stockholders and common stock dividends paid from the current income statement influence the balance sheet item retained earnings. The a

Define forward exchange rate will be an unbiased predictor, Explain the con...

Explain the conditions under which the forward exchange rate will be an unbiased predictor of the future spot exchange rate. Answer:  the conditions when forward exchange rate

Economics, a) Define monetary policy, and discuss the operation of monetary...

a) Define monetary policy, and discuss the operation of monetary policy in the United States post-GFC.

What is share exchange, What is Share exchange    Predator company off...

What is Share exchange    Predator company offers their shares in exchange for target company's shares. So target shareholders become part of predator shareholders and so have

Management of sundry debtors, Management of Sundry Debtors: SUNDRY - M...

Management of Sundry Debtors: SUNDRY - Miscellaneous infrequent or small customers that are not given individual ledger accounts but are classified as a group. SUNDRY CREDI

Sale of common stock on the statement of cash flows, Accrued Payroll was $1...

Accrued Payroll was $10,000 and $15,000 at the beginning and end of 20X4, respectively. The payroll expense for 20X4 totaled $520,000. Cash outflow for payroll during 20X4 totaled:

Price-output determination under monopoly, The potato chip industry in the ...

The potato chip industry in the Northwest in 2007 was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competin

Non-traditional mortgages, Non-traditional mortgages also referred to...

Non-traditional mortgages also referred to as Alternative Mortgage Instruments (AMIs), do not have level monthly payments, but employ some other structure of payment.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd