What does “Cook the Books” Mean?
The expression “cook the books” refers to the practice of arranging company financials in a manner that tends to call attention to positive data but obscures or greatly minimizes the ability to identify negative data. As a result, this type of creative accounting helps to present a false image of the true nature of the company’s financial condition. While most companies that choose to cook the books make it a point to stay barely within the legal restrictions that relate to keeping company records, there are instances where information is omitted or falsified as part of the process. There are several reasons why a business may choose to cook the books. One motive is to secure additional funding in order to maintain or expand the business. To that end, the business may develop a set of company books to show prospective lenders or investors. The data is arranged so that the business appears to be more profitable and stable than properly organized accounting records would indicate. A comp
