Accounting red flags: A simple accounting trick used by companies to manipulate net profit and take investors for a ride - The Economic Times
A company may report profits for years, only to reveal later that some figures were wrong. Accounting rules require companies to correct mistakes from earlier years, but how they do so can change the picture of their profitability. Sometimes, old losses are recorded years later or kept outside regular profits. Therefore it becomes imperative for investors to understand how past accounting errors are corrected, how the process can be misused, and what they should watch for.