creative (adjective, cre-a-tive, \ kriˈeɪtɪv \) accounting (noun, ac-count-ing, \ əˈkaʊntɪŋ \)
Definition: is a practice of presenting a business’s financial situation in a better light than it really is. Despite the fact that creative accounting involves finding and using various loopholes, it is still not illegal since it always meets the necessary accounting standards. Creative accounting allows a business to appear financially more stable than it really is. For instance, a business may sell some of its assets at the end of a financial year in order to create a revenue that would offset a loss. Creative accounting may also be implemented when a business owner wishes to keep a company’s debt off the balance sheet to make it look better for the investors, for example.
In a Sentence:
- If we want to make the current period earnings seem better, we may go with creative accounting and delay recording the current expenses.
- You need to be careful. Even though creative accounting is generally legal, it is still a risky business.
Synonyms and related words: financial engineering, creative financing, earnings management, cooking the books, aggressive accounting, financial report
