Basically there’s quite a bit of flexibility in the way we can interpret the standards and principles of accounting. For example, we may want to report bigger profit so that we can attract investors on the capital markets on the other hand, smaller profit may be better so that we pay less tax. the problem is that the line between truthful and misleading
Representation of figures is sometimes very thin, and this is where people get into trouble.
Off-balance-sheet accounting is seen by some as one type of creative accounting. people have been arguing about it for year, though the key point to remember is that the accounting treatment of legitimate business reason, an the question for the accountants is how to present the financial implications of such leases in the accounts. In theory, the idea is that leasing an asset. instead of buying it allows the company to exclude the liability from its account. Hope this helps – give me a call if you have any more question