Which term describes the unethical practice of inflating asset values and reducing liabilities?

The correct answer is - Creative Accounting

Key Points

• Creative Accounting
  • It involves the manipulation of financial records and accounting rules.
  • The primary goal is to inflate asset values and reduce liabilities.
  • This practice is often used to present a more favorable view of a company's financial position.
  • It is considered unethical as it misleads stakeholders about the true financial health of the company.

Additional Information

• Tax Evasion
  • Involves illegal practices to avoid paying taxes.
  • Examples include underreporting income or inflating deductions.
• Insider Trading
  • The act of trading a public company's stock based on non-public, material information.
  • It is illegal and considered a breach of trust.
• Fair Trade
  • A trading partnership that seeks greater equity in international trade.
  • Focused on better prices, decent working conditions, and fair terms for farmers and workers.