Chapter 21
Ten Financial Accounting Shenanigans
In This Chapter
Inflating revenue and misclassifying income
Devaluing liabilities and inflating assets
Staying mum about related-party transactions
Capitalizing costs
Expensing costs
Financial statement shenanigans center around making a company’s financial statements look fantastic, even when they aren’t. The major areas of concern all artificially inflate the results of operations. The company may report higher net income than it should or manipulate its balance sheet figures, perhaps by underreporting liabilities or showing long-term assets as current. Why do companies mess around with their books and deviate from generally accepted accounting principles? Because they want to attract new investors or creditors by showing them great operating results. In this chapter, I reveal ten such manipulations.
Reporting Revenue in the Wrong Period
In financial accounting, income shenanigans usually result from reporting revenue early. The goal ...
