Two sets of books

Short description: Keeping multiple accounting records for different uses

Part of a series on

Accounting

* Historical cost
* Constant purchasing power
* Management
* Tax

Major types

* Audit
* Budget
* Cost
* Forensic
* Financial
* Fund
* Governmental
* Management
* Social
* Tax

Key concepts

* Accounting period
* Accrual
* Constant purchasing power
* Economic entity
* Fair value
* Going concern
* Historical cost
* Matching principle
* Materiality
* Revenue recognition
* Unit of account

Selected accounts

* Assets
* Cash
* Cost of goods sold
* Depreciation / Amortization
* Equity
* Expenses
* Goodwill
* Liabilities
* Profit
* Revenue

Accounting standards

* Generally-accepted principles
* Generally-accepted auditing standards
* Convergence
* International Financial Reporting Standards
* International Standards on Auditing
* Management Accounting Principles

Financial statements

* Annual report
* Balance sheet
* Cash-flow
* Equity
* Income
* Management discussion
* Notes to the financial statements

Bookkeeping

* Bank reconciliation
* Debits and credits
* Double-entry system
* FIFO and LIFO
* Journal
* Ledger / General ledger
* T accounts
* Trial balance

Auditing

* Financial
* Internal
* Firms
* Report

People and organizations

* Accountants
* Accounting organizations
* Luca Pacioli

Development

* History
* Research
* Positive accounting
* Sarbanes–Oxley Act

* v
* t
* e

Not to be confused with Double-entry bookkeeping.

The concept of "two sets of books" refers to the practice of keeping two sets of accounting ledgers ("books"). In colloquial terms, this practice may refer to fraudulent behavior, i.e. attempting to hide or disguise financial transactions from outsiders by having a falsified set of records for official use and another for internal recordkeeping. It may be done for legitimate reasons as well.

## Contents

* 1 Fraud
* 2 Legal practice
* 3 See also
* 4 References

## Fraud

Having two sets of books enables a company to use one set for tax authorities and another for investors. The goal is to maximize income for financial statements in one set while showing lower income on the other set in order to avoid paying higher taxes.[1]

## Legal practice

Keeping "two sets of books" does not always refer to an illegal practice. Publicly-traded companies might maintain two sets of accounting records while still abiding by the Financial Accounting Standards Board (FASB) rules for preparing financial statements and the Internal Revenue Code when preparing tax returns.[2]

## See also

* Tax evasion
* Accounting ethics
* Creative accounting

## References

1. ↑ "Corporations avoid taxes by keeping two sets of books". USATODAY.COM. http://usatoday30.usatoday.com/news/opinion/letters/2011-04-05-letters05_ST_N.htm.
2. ↑ Connolly, Timothy P. (2 October 2012). "Is it OK to Keep Two Sets of Books? A Primer on Deferred Tax Assets". https://blogs.cfainstitute.org/insideinvesting/2012/10/02/is-it-ok-to-keep-two-sets-of-books-a-primer-on-deferred-tax-assets/.

0.00

(0 votes)

Original source: https://en.wikipedia.org/wiki/Two sets of books. Read more

|

Retrieved from "https://handwiki.org/wiki/index.php?title=Finance:Two_sets_of_books&oldid=4112681"
*[v]: View this template
*[t]: Discuss this template
*[e]: Edit this template