Is creative accounting acceptable in financial reporting practices?

Creative accounting practices are different from fraudulent accounting practices and thus are not illegal but immoral in terms of misguiding investors. Companies are able to manipulate the financial statements through various types of creative accounting techniques.

Why is it important to follow generally accepted accounting principles?

The ultimate goal of GAAP is to ensure a company’s financial statements are complete, consistent, and comparable. This makes it easier for investors to analyze and extract useful information from the company’s financial statements, including trend data over a period of time.

What are generally accepted accounting principles who is responsible for them?

Responsibility for enforcement and shaping of generally accepted accounting principles (GAAP) falls to two organizations: The Financial Accounting Standards Board (FASB) and Securities and Exchange Commission (SEC). The SEC has the authority to both set and enforce accounting standards.

What is the most acceptable accounting framework?

The most commonly-used accounting frameworks are generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS). GAAP is used by entities in the United States, while IFRS is used in most other parts of the world.

Is creative accounting Good or bad?

Creative accounting may help maintain or increase the share price by decreasing debt level to lower risk and by showing improved profits. The high share price can help the company in raising new capital and in takeover attempts.

How is creative accounting practiced?

Creative accounting consists of accounting practices that follow required laws and regulations, but deviate from what those standards intend to accomplish. Creative accounting capitalizes on loopholes in the accounting standards to falsely portray a better image of the company.

What would happen if there were no generally accepted accounting principles?

It would be almost impossible to compare financial statements. It would be easier to compare financial statements. Companies would be able to generate deals more easily. It would be almost impossible to compare financial statements.

Why and when the generally accepted accounting principles were established?

Generally Accepted Accounting Principles were eventually established primarily as a response to the Stock Market Crash of 1929 and the subsequent Great Depression, which were believed to be at least partially caused by less than forthright financial reporting practices by some publicly-traded companies.

What are the benefits of creative accounting?

Advantages of creative accounting Desired results: Creative accounting helps a business to set the required parameters, which is practically impossible. The business can show a smooth and good growing graph. In order to attract investors, the management adopts this technique to show steady profits and good revenue.

What is creative accounting practices?

How many software architecture patterns should you use?

Right now, the majority of programs use one of five architectures. Mark Richards is a Boston-based software architect who’s been thinking for more than 30 years about how data should flow through software. His new (free) book, Software Architecture Patterns, focuses on five architectures that are commonly used to organize software systems.

What are the best practices for documenting architecture and programming?

DRY principle (Don’t Repeat Yourself) works equally well as in programming and in documenting architecture. Create links, but do not write the same thing several times. Recognize for whom you are writing. Perhaps the most important rule. Documentation for developers and top management may differ dramatically.

How many architecture types should your program have?

Right now, the majority of programs use one of five architectures. Mark Richards is a Boston-based software architect who’s been thinking for more than 30 years about how data should flow through software.

What are the 5 principles of software architecture?

5 Key Principles of Software Architecture. 1 Single Responsibility Principle. Each system capability (e.g. service/module/api) should have only one responsibility and as such one reason to change. 2 Open-Closed Principle. 3 Liskov Substitution Principle. 4 Interface Segregation Principle. 5 Dependency Inversion Principle.