2 ms·
If they are using cash I know exactly what's going on by looking any balance sheet or income statement. If they are accrual I have no idea what lies beneath the
by datavirtue 3y ago
If they are using cash I know exactly what's going on by looking any balance sheet or income statement. If they are accrual I have no idea what lies beneath the surface. Everyone is on accrual. For a public company you get a balance sheet and income statement. Good luck. You have to audit them and all of their subsidiaries. But you can't because you don't have access to any of the books. It just leaves everything open to "creative accounting." It has been a proven vector of corruption and high crimes.
Recently (pre-pandemic) the guy that cracked Madoff released an analysis of GE claiming that they have been cooking their books for years--outright accusing them of fraud. GE and their media sycophants denied it adamantly. Story goes away without any proof whatsoever. Maybe the guy is nuts? I'm suspicious. Day traders LOVE GE for the ups and downs. They bought at $9 and now the stock is $132. In that case no one cares if the books are cooked as long as they can ride the wave.
Feel free to read about Enron on Wikipedia. There are plenty of case studies and the world will keep producing more.
- j45 3y agoI understand that you are presenting an accounting lens through which to see data. All data is not accounting data. With Accrual accounting, it can come clearer in the end, especially that it is not clear, in the way you've described. Accrual accounting itself does also have processes that should be followed, but it doesn't speak much about data ownership. Auditing entries is relative to how accounting systems are setup to be audit-able, or not. The point about data ownership remains on it's own from the tangents of accounting data.