Accounting Solver

March 4th, 2008

ACCOUNTING NOISE 5: Cooking the Books

Any company that is not conservative in the reporting of its revenues and expenses is engaging in “accounting noise.”

Proper financial statements should be able to provide the following information about the business:
Feedback. The information from the Financial Statements should be able to explain past events, confirm or adjust expectations / predictions, show the results of […]

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March 3rd, 2008

ACCOUNTING NOISE 4: Cooking the Books

A company who has had a poor performance resorts to “accounting noise” to make it look better than it really is (e.g., Enron, WorldCom, etc).
In addition to fudging revenue figures (recording future / potential income that may or may not actually be realized) and fudging expense figures (postponing the recording of expenses into the future), […]

By ren -- 0 comments

March 1st, 2008

ACCOUNTING NOISE 3

A company who has had a poor performance resorts to “accounting noise” to make it look better than it really is.
One way is to fudge income figures (e.g., declaring prospective income that has not yet been realized).

Another way is to fudge expense figures. In effect, postponing expenses incurred during […]

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February 27th, 2008

ACCOUNTING NOISE 1

Accounting is basically common sense. But there is such a thing as “accounting noise.”

Accounting noise is basically used by companies in financial trouble who are trying to hide their problems by employing all sorts of esoteric accounting jargon. If you look closely, these companies are usually overstating revenues or understating expenses or […]

By ren -- 0 comments