Study Regarding the Reality and Creativity of the Financial Performance of the Economic Entities

Abstract

Globalization has polarized the world, transforming the economic landscape. Geography is obsolete, financial flow increases everywhere at both national and global level, covering geographic regions that are a world apart, and economic entities have set as their primary objective the maximization of stock value. Given all the above the study with respect to the reality and of the entities' financial performance, emphasizes the fact that financial performance may be disguised by professional accountants, who are endowed with creativity and protecting the accounting methods available.Analyzing the traditional way financial performance of economic entities is reproduced, the profit and loss account, we had to wonder how real it was. The answer can only be imprecise: a financial performance that is as realistic as possible. Why? Because the liberty economic entities have to choose the treatments and accounting techniques leads to a misrepresentation of their actual financial performance. In this sense, our research studies the impact that treatment and accounting policies (recommended by the International Accounting Standards and frequently used by Romanian economic entities) have on the financial performance mirrored by the profit and loss account. Will the financial information receivers let themselves deceived by the craftsmanship of the management and professional accountants to build a magical financial performance? How long can be hidden and disguised the bad news regarding the low financial performance reflected in the profit and loss account? Not forever, of course, because there are also techniques and means for detecting these.Our study highlights that in order to estimate the financial performance of the economic entities it is necessary to go beyond the results of the exercise, which can be deceiving, and study the economic, overall result as well as the treasury result.The specialists' and the possible options of international accounting policies and procedures make it advisable for us to pay a lot more attention to the information regarding the financial performance of economic entities.