A slightly pejorative term used to describe highly and deliberately complex accounting methods. Companies usually use black-box accounting when they wish to appear more financially stable than they are. In doing so, they may report their earnings using overly-sophisticated methods designed to hide losses or boost profits. In explaining the methodology, companies may use unnecessarily technical language and/or include extraneous information in order to confuse the casual reader. It is thought to take a skilled person to "decode" black-box accounting.
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Accounting methodology so complex that financial statements are nearly impossible to accurately interpret. Black-box accounting may be used to obscure unfavorable information.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.