Spot Creative Accounting Before It Costs You Your Investment
Email this articleWith the recent big business scandals at some of our country's most stable and reputable companies, creative accounting has become a four-letter word. But with a little bit of effort, you can spot creative financing techniques and protect your valuable investments to a greater degree. Maybe you can even join the industry yourself and help restore its reputation!
The highly publicized Enron accounting scandal was responsible for thousands of investors and employees losing their life savings. Creative accounting, sometimes known as "cooking the books," ended up hiding serious financial problems from interested stakeholders until it was too late to recover. Unfortunately, there is no way to fully protect yourself from accounting scandals. But you can lessen your degree of risk by doing some simple legwork with a calculator and your investments' quarterly reports.
Creative Accounting: Red Flags
- Accounts receivables that outpace sales. Something could be amiss if reported accounts receivables don't match quarterly sales.
- Deterioration of Gross Margins. This is a simple accounting measurement of production costs as compared to selling price.
- Low Cash Flow. If net income is up, but cash flow is down, this could alert you to creative accounting techniques.
Accounting: The Online Degree Up Close
- Four Years Minimum. Online accounting degree programs typically involve four years of financial training.
- Wide Open Field. Accounting positions for online degree holders will grow faster than the national average through 2012.
- Expected Salary. Online accounting degree holders can often expect to earn between $37,000 and $61,000 a year.
About the Author
Kelly Richardson covers the local education and technology scenes in major cities across the country. His articles appear in a variety of respected educational journals, periodicals, and e-zines.
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