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

Characteristics - nature of financial management, Characteristics - Nature ...

Characteristics - Nature of Financial Management: 1) Financial Planning and Control: Finance is a base for all the business activities. Business Activities should be not on

Estimate the money in dollars have lost or gained, In January 2010 your fir...

In January 2010 your firm bought from an Italian firm goods payable in Euros worth EU2,000,000.  Suppose that at that time the exchange rate of the Euros was 1EU=$1.25.  Because th

Working capital, discuss the applicability of an operating cycle considerin...

discuss the applicability of an operating cycle considering broilers?

Financial analysis for anthony''s orchard, The Final Project for this modul...

The Final Project for this module is a consultancy report to Anthony’s Orchard, an expanding apple orchard and distributor. The company has been entertaining the idea of expanding

Calculate the economic order quantity, Q. Calculate the Economic Order Quan...

Q. Calculate the Economic Order Quantity? Calculate the Economic Order Quantity from the following details: Annual Inventory Requirements = 4, 00,000 units Cost of placin

Bonds, Explain what a bond is and discuss its nature as a "fi xed income" s...

Explain what a bond is and discuss its nature as a "fi xed income" security.Discuss important terms in relation to bonds as the "price", "maturity", "current yield", "yield to matu

Value of conversion benefits, Value of Conversion Benefits: Having seen...

Value of Conversion Benefits: Having seen the measure used to analyze the convertible bonds, let us now examine the merits and demerits of convertible bonds and why or why not

What are the specefic control procedures of benchmarking, What are the spec...

What are the specefic control procedures of benchmarking Specific control procedures must be in place which include: O Organisational structure (clear lines of responsibilit

How the export promotion trade strategy, Question 1: (i) How are educa...

Question 1: (i) How are education and economic growth connected? (ii) Explain how the export promotion trade strategy may be more growth promoting for developing economies,

How cash budget and capital budget relate to pro forma, Explain how the cas...

Explain how the cash budget and the capital budget relate to pro forma financial statements. The cash budget depicts the projected flow of cash in and out of the firm for fixed

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