Article : Creative Accounting: A Negative Aspect Of Accounting


Creative Accounting: A Negative Aspect Of Accounting


Renu, Anchal Aggarwal

The concept of creative accounting is not new rather by late 1980s it was the major concern for the national and international regulators and continues to be a major issue of concern for the regulators. Creative accounting can be considered positive as well as negative aspect of accounting. It is considered positive when the new techniques are introduced to refine the existent accounting system. It is considered negative when accounting scandals are continuously emerging. But, actually it appears to be negative rather than positive and therefore it is undesirable. So in this study we highlight the creative accounting in negative sense with the help of the creative accounting methods adopted by Enron Company and Satyam Computers which led to the collapse of these two. The objective of the study is to make creative accounting as clear as possible with the help of the review of studies conducted to show the negativity of creative accounting, to highlight the reasons for using creative accounting practices, to give recommendations and suggestions from the study. Finally It was concluded that creative accounting is unethical and a negative aspect of accounting. In short run it appears to be attractive and beneficial but it has long term implications which lead to the collapse of the companies.

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