Companies may use various methods to 'tweak' their books to appear financially healthy. These can include overestimating future revenues, underestimating future costs, recognizing revenues before they are earned, and delaying the recognition of expenses. They may also engage in complex transactions that obscure the true financial state of the company, such as off-balance-sheet transactions or the use of special purpose entities. However, these practices are often illegal and can lead to severe penalties.
Financial statements do not always tell the entire story about a company. Accounting methods and fi...
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