Bazhenov, A.A., Polyakova, N.N. Bad-faith formation of the profit indicators in accounting (financial) reporting of organizations

Abstract: The article shows that the transfer to the market economy required a serious reconstruction of the methods for reporting financial results and formation of a novel approach to the accounting of sources of financing of organization spending. As a result of analysis of the current legislation, it is established that the use of income in the organization for the consumption, except for dividend payments, by lowering the passive sub-accounts on Account 84 “Reserve profit (unrecovered loss)”, including assets reporting, is not supported by current legislation. The authors also prove that due to referring spending to Account 84, the general sum of spending is lowered and the sum of general financial result is groundlessly heightened. It results in groundless awards to the executive body of a unitary enterprise based on the results of the accounting year, harming the owner (the state). Also other users of accounting (financial) reports are misled as to the efficiency of the financial and economic activities of the state.

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