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Cooking the books definition

What does it mean to cook the books?

Cooking the books refers to when financial statements are tampered with to make a company’s earnings appear better than they actually are. There are rules and principles that all companies must follow. However, if these rules broken, it’s called cooking the books.

In the 19th and 20th century, the term creative accounting was preferred over the traditional “cooking the books”. But as corporate fraud increased and the public opinion turned against the act of fraud, the soft, almost amiable phrase of creative accounting was dropped and replaced with its predecessor.

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