Cookie jar accounting

Cookie jar accounting or cookie jar reserves is an accounting practice in which a company uses generous reserves from good years against losses that might be incurred in bad years.

An example of a cookie jar reserve is a liability created when a company records an expense that is not directly linked to a specific accounting period -- the expense may fall in one period or another. Companies may record such discretionary expense when profits are high because they can afford to take the hit to income. When profits are low, the company reduces the liability (the reserve) rather than recording an expense in the lean year.

The United States Securities and Exchange Commission (SEC) does not permit cookie jar accounting by public companies because it can mislead investors regarding a company's financial performance.^[1]

References

1. ^ Associated Press (2002-06-03). "Microsoft settles accounting charges with SEC". USA Today. http://www.usatoday.com/tech/techinvestor/2002/06/03/microsoft-sec.htm. Retrieved 2007-08-13. 

This accountancy-related article is a stub. You can help Wikipedia by expanding it.v · Categories: Accounting systems Accounting stubs Wikimedia Foundation. 2010. Игры ⚽ Поможем решить контрольную работу Atacama Submillimeter Telescope Experiment Ford Hall Look at other dictionaries: cookie jar accounting — n. The corporate accounting practice of taking a reserve to reduce profits in good years and then using that reserve to increase profits in bad years. Also: cookie jar accounting. Example Citation: Providing further evidence of warming relations… …   New words Cookie Jar Accounting — An accounting practice in which a company uses generous reserves from good years against losses that might be incurred in bad years. Cookie jar accounting is a sign of misleading accounting practices. This gives the sense of income smoothing ,… …   Investment dictionary Cookie jar (disambiguation) — A Cookie jar is a jar that holds cookies. Cookie jar may also refer to: Cookie Jar (song), by Gym Class Heroes Who Stole the Cookie from the Cookie Jar? , an elementary school song. Cookie Jar Group, the Canadian animation studio Cookie Jar Kids… …   Wikipedia Cookie jar — This article is about a jar that holds cookies. For other uses, see Cookie jar (disambiguation). Cookie jars are utilitarian or decorative ceramic or glass jars often found in American and Canadian kitchens. In the United Kingdom, they are known… …   Wikipedia Cookie Jar Group — Cookie Jar redirects here. For other uses, see Cookie Jar (disambiguation). Cookie Jar Group Type Private Industry Distribution and production …   Wikipedia cookie jar reserves — A semi humorous term for *reserves or accrued expenses created with the intention of manipulating *financial statements. The term derives from the image of dipping at one’s convenience into a jar of cookies. By analogy, reserves of this type are… …   Auditor's dictionary Creative accounting — The manipulation of *financial statements through the use of imaginative or unusual accounting techniques. Creative accounting techniques include, among other things, the following: (i) extension of the *amortization periods of *long term assets… …   Auditor's dictionary Voodoo Accounting — Any form of accounting that does not follow principles of conservatism. While there are many methods by which financial statements can be fudged, it always comes down to inflating revenue or hiding expenses. Examples of accounting shenanigans… …   Investment dictionary green accounting — n. A system in which economic measurements take into account the effects of production and consumption on the environment. Example Citation: Some independent research groups have tried to devise a kind of green accounting or general progress… …   New words Business (General) — Business General adminisphere aerotropolis bads BAM boomsayer booth bunny borrow brains Buns of Steel …   New words 18+ © Academic, 2000-2024 Contact us: Technical Support, Advertising Dictionaries export, created on PHP, Joomla, Drupal, WordPress, MODx. Mark and share Search through all dictionaries Translate… Search Internet Share the article and excerpts Direct link … Do a right-click on the link above and select “Copy Link”