Making technical adjustments in the financial statements to artificially beautify the profitability is an unethical and potentially illegal behavior. This behavior will not only mislead investors, creditors and other stakeholders, but may also have serious legal and financial consequences for the company and its management. Financial consequences. The following are some common **inappropriate**technical adjustment methods, but it must be emphasized that these practices are **undesirable**： ### 1. **Manipulation of income recognition** -**Early confirmation of income**: When the income has not been actually realized or the confirmation conditions have not been met, it will be included in the current income in advance. -**Fictitious income**: Inflated income through false transactions or related party transactions. ### 2. **Expense capitalization** -**Capitalize expenditures that should have been costed**: For example, capitalize daily maintenance expenses or R&D expenditures into long-term assets, thereby reducing current expenses and increasing profits. ### 3. **Inventory and cost manipulation** -**Under-accounting for inventory impairment**: Deliberately underestimate inventory impairment reserves to inflate current profits. -**Change the cost calculation method**: Adjust the cost by changing the inventory pricing method (such as changing from the first-in, first-out method to the last-in, first-out method). ### 4. **Use one-time items** -**Classify recurring expenses as non-recurring losses**: Classify normal operating expenses as “one-time” or "non-recurring" items to exaggerate core earnings. ### 5. **Related party transactions** -**Transfer of profits through related party transactions**: Trade with related parties at unfair prices to artificially adjust profits. ### 6. **Changes in accounting estimates** -**Abuse of accounting estimation changes**: For example, suddenly extend the depreciation period of fixed assets or reduce the proportion of bad debt provisions to reduce current expenses. ### 7. **Off-balance sheet financing** -**Hidden liabilities**: Hide debts through special purpose entities (SPEs) or other off-balance sheet arrangements to make the balance sheet look healthier. ### 8. **“Big Bath Accounting" (Big Bath Accounting)** -**Excessive provision for expenses in years of poor performance**: A large amount of impairment or restructuring expenses are made at one time in order to “release” profits in future years. ###** Serious consequences** -**Legal risks**: May violate laws and regulations such as the Securities Law and the Company Law, and face investigations and penalties from regulatory agencies (such as the Securities and Exchange Commission). -**Loss of reputation**: The reputation of the company and management will be seriously damaged, resulting in the loss of investors and customers. -**Financial consequences**: It may be necessary to restate the financial statements and even face class actions or high fines. ###**Correct approach** Companies should strictly abide by accounting standards (such as "corporate Accounting Standards" or IFRS) to ensure the authenticity, accuracy and completeness of financial reports. If you have questions about financial processing, you should consult a professional accountant or auditor instead of trying to cover up the problem through technical adjustments. Please always remember: **Integrity is the cornerstone of financial reporting**, and anyone who artificially beautifies profits will eventually pay the price.