Cookie Jar Accounting

Cookie Jar Accounting

An accounting practice where a company uses generous reserves from good years against losses that might be incurred in bad years.

Notes:

This gives the sense of "income smoothing," because earnings are understated in good years and overstated in bad years. I'm sure you've heard of companies taking special charges or write downs, well that's just another flavor of cookie jar accounting.

See also: Accounting, Cook the Books, Earnings, GAAP, Net Income, Restatement, Voodoo Accounting