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Creative accounting



Creative accounting . This term is used to describe the process by which accountants and advisors use their knowledge about accounting standards to make up the figures reflected in the company's accounting, while still complying with accounting principles. In this way, as criteria or other aspects of accounting are applied, the results may vary and be more favorable to organizations.


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Enron, World Com and others are some cases of creative accounting (euphemism for fraud with numbers) that have appeared in recent times, have had a great impact on the American economy, to the point that markets have lost confidence in the Generally accepted accounting principles , in auditors, advisors and even in investment analysts; Who recommend buying this or that stock, earn good commissions and leave thousands of investors in the lurch.
Basic functions
Provide information on significant changes in equity.
To study the causes that have originated these variations so as to determine an adequate planning of the actions to be followed.
It is imperative that the accountant is aware of progress, both in terms of the theoretical part and its conceptualization, as well as in relation to the practical elements and the investigative processes.
It is therefore of paramount importance to understand that general accounting plays an effective and decisive role in society and should not pursue independent objectives. General accounting, in addition to its historical function, has become important in its function of forecasting as a tool for controlling the economy and administration. The demand for new areas is clear and solid, and the profession must necessarily direct its efforts to fulfill the aspirations and aspirations of society.
Control and information will be the basic elements for the success of large organizations. General accounting is part of an information network, so accountants need to expand their skills and perspectives to be able to cope with change when it occurs.
The Committee on Terminology of the American Institute of Public Accountants (AICPA) proposed in 1941 that general accounting should be defined as the art of recording, classifying, and summarizing in a meaningful manner and in monetary terms, transactions and events or Events that are, at least in part, of a financial nature, as well as interpreting their results.

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