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Well, yes and no. That's why there are accounting standards like the FASB that the government makes companies use to pay taxes. In fact, almost all large corpo
by lionheart 16y ago
Well, yes and no. That's why there are accounting standards like the FASB that the government makes companies use to pay taxes.
In fact, almost all large corporations keep one set of books using their internal accounting standards and another set of books using the federally-mandated standard in order to pay taxes.
Hollywood revenue hiding was done using their particularly-unfair internal accounting rules. However, those same companies then did, in fact, recognize that revenue correctly using the FASB when they had to pay takes to the IRS.
As long as all taxes have to be paid using a standard accounting system, there really isn't any way to hide profits except to ship them off to another country, like in this example.
- fragmede 16y agoHow does an accounting standard like the FASB prevent cheating? My understanding of the most egregious creative accounting tricks was via shell/dummy corporations. Even if each of those corporations individually follows an accounting standard, the graft comes via many companies acting in concert. It would take someone investigating from the outside to matching all the involved companies together before the ploy was exposed. (If Hollywood revenue hiding never got that advanced, then I blame Hollywood movies, and their fictional depictions of accounting practices.) (I'm not an accountant and this is out of curiosity.)
- lsc 16y agonow, I'm not an accountant either, but the whole idea behind the accounting standards is to prevent cheating, right? so if you can get around that by using a shell corporation, the accounting standard is broken.