SHS Web Conf.
Volume 74, 2020The 19th International Scientific Conference Globalization and its Socio-Economic Consequences 2019 – Sustainability in the Global-Knowledge Economy
|Number of page(s)||8|
|Section||Behavioral Economics and Finance|
|Published online||10 January 2020|
The creative accounting in determining the bankruptcy of Business Corporation
University of Zilina, Faculty of Operation and Economics of Transport and Communication, Department of Economics, Univerzitna 8215/1, 010 26 Zilina, Slovak Republic
2 University of Zilina, Faculty of Operation and Economics of Transport and Communication, Department of Economics, Univerzitna 8215/1, 010 26 Zilina, Slovak Republic
* Corresponding author: email@example.com
If there is a period of unfavourable to critical economic development Business Corporation, there is no doubt about the significance of determining the actual factual moment of bankruptcy of the business corporation. In such a situation, it is crucial for further development approach of the statutory body of Business Corporation in terms of truly evaluation and timely search for a constructive solution. There are different methods of creative accounting to delaying the impending corporation bankruptcy. This paper describes the individual ways in which the creative accounting can favour the business corporation, e.g. increase the reported earnings or reduce the reported loss, manipulate with indicators used in financial analysis, conceal financial risk or strengthen the company´s access to finance. The reason for using these practices by the company management can be just a simple delay in solving the situation, trying to keep the company position as long as possible or the reasons are more complex and sophisticated. There are many model to predict the adjusting financial statements. We described and applied two of them, the CFEBT model and BENEISH M-score model.
© The Authors, published by EDP Sciences, 2020
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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