"Fishy accounting" or "awful close to a con job" or "Hollywood accounting" seemed like rude ways to refer to accounting practices that purposely gussy up a company's books. So the good people of the financial community came up with the euphemism "aggressive accounting."
Sometimes these steps can be illegal, or very close to illegal. In these situations, you can call it "aggressive accounting" the way you could call World War II "aggressive diplomacy." Other times, the accounting practices don't cross a moral line, but just put a company's finances in the best possible light.
The truth is that accounting seems pretty straightforward, but there is a lot of grey area. Expenses and revenues can be categorized in a lot of different ways, or the timelines of payments and revenues can be massaged to take advantage of loopholes. Like how a good lawyer can make things legal (or at least seem legal) that a bad lawyer couldn't, a good accountant can get aggressive with the books and save (or even make) a company money.
There are a couple of main reasons for aggressive accounting. A company might look to lower its tax bill, so its accountants structure things to take advantage of the fine print of the tax code. Or a company might try to make its revenue and profits look as big as possible, in order to impress shareholders or entice an acquisition offer.
Related or Semi-related Video
Finance: What is GAAP?21 Views
Finance allah shmoop what is a gap Yeah not this
Nor this Nor this gap is an accounting term that
stands for generally accepted accounting principles And it is basically
the accounting code of hammurabi or the ten commandments that
is There are lots and lots and lots of ways
that clever bean counters could define and or account for
the notion of profits lots of ways to recognize revenues
versus sales and lots of ways to think about how
much that ten commandment frisbee factory is appreciating in value
each year Well the world according to gaff outlines the
structure under which accountants must you know count beans the
basic idea Well sort of in the vein of the
golden rule that is do unto others as you'd have
them do unto you Gap requires that accountants always present
their numbers in the most reasonably conservative manner possible such
that they never overstate how profitable or how well the
company is doing Gap is the framework the map the
religion and the destinations we want to go inside this
neck of the accounting woods are three income statement cash
flow statement balance sheet will none of these three key
elements mean anything however unless they all follow the same
rules they're linked like gears in an overpriced swiss watch
and the eighteen zillion individual rules on their own mean
nothing like what is revenue Is it a dollar you
collect in cash at a video game arcade booth Is
it the promise to pay that dollar in a year
Well there are lots of ways to account for this
notion of revenue so don't think of gaff isa siri's
of rules rather think of it as this you know
key mathey kind of finance e a county religion it's
all about quote doing right unquote and part of that
issue is a natural conservatism that has to come with
it kind of amish you'd think would be a good
gap Accountants Well if you're thinking about how to account
for five dollars promised to you in a year well
you have to recognize that there is risk you won't
collect it and that money a year from now is
worth less than its face value and well that you
should categorise those revenues way off in the distance differently
from how you'd categorize collecting the five dollar bill in
cash that day and putting it in your cigar box
there right So gap is basically the force in accounting 00:02:26.44 --> [endTime] May it be with you
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