Accounting Noise

Accounting Noise

The act of making a firm's financial situation look better or worse than it really is by using or abusing the Generally Accepted Accounting Principles. Accounting noise is, to a certain extent, inevitable, as succinct statements very rarely give a full and complete picture of a firm's financial state. For this reason, potential and current investors are often advised to read the footnotes of financial statements to see a fuller picture. Accounting noise may make a firm look better by showing many one-time-only sales or worse by showing one-time-only expenses. Most of the time, accounting noise is incidental, but some firms abuse the GAAP to manipulate earnings in order to make themselves look healthy when they are not. See also: Aggressive accounting.