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In producing the Conceptual Framework and some of the current MFRS, the MASB has had...

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Accounting

In producing the Conceptual Framework and some of the current MFRS, the MASB has had to address the potential problem that the management of some companies may choose to adopt inappropriate accounting policies. These could have the effect to portraying an entity's financial position in a favourable manner. In some countries this referred to as "creative accounting".

Required : Describe in broad terms common ways in which management can manipulate financial statements to indulge in 'creative accounting' and why they would wish to do so.

(10marks)

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