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How to Manipulate Number Record

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Accounting manipulation is defined as when the managers of an organization intentionally misstate their financial information to favorably represent the entity's financial performance. Figure 1 summarizes the principles of accounts manipulation.
Manipulation of financial information which is called by several terms such as earnings management, income smoothing, creative accounting practices, aggressive accounting or account manipulation, prevents the allocation of resources in the most efficient areas in the economy.
Creative accounting consists of accounting practices that follow required laws and regulations, but deviate from what those standards intend to accomplish. Although creative accounting practices are legal, the loopholes they exploit are often reformed to prevent such behaviors.
Creative accounting can be defined in a number of ways also called aggressive accounting. Creative accounting is a process whereby accountants use their knowledge of accounting rules to control the figures reported in the accounts of a business.
Examples of Creative Accounting The company raises invoices before the end of the accounting year to inflate its sales figures and the actual transaction occurs on the post date. This is an example of creative accounting where the company attempts to show the boosted up revenue figures.
We use 3 factors to detect manipulation in financial statements: firm value, corporate governance and auditor external. Firm value are the internal factor of the firm that indicate the performance of the firm. In this research the proxy of firm value are debt, liquidity and ROA.
Recording Revenue Prematurely or of Questionable Quality. Recording Fictitious Revenue. Increasing Income with One-Time Gains. Shifting Current Expenses to an Earlier or Later Period. Failing to Record or Improperly Reducing Liabilities.
The balance sheet is so named because the two sides of the balance sheet ALWAYS add up to the same amount. The balance sheet is separated with assets on one side and liabilities and owner's equity on the other. This one unbreakable balance sheet formula is always, always true: Assets = Liabilities + Owner's Equity.
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