Michel Pireu Columnist

From the Money Game by Adam Smith: You can see that there are a lot of numbers floating around Wall Street, that the game is played with numbers... Numbers reported as sales and earnings, and earnings, in anybody’s systems, are one of the most important factors. But what are earnings? It really ought to be easy. You pick up the paper, and Zilch Consolidated says its net profit for the year just ended was $1m or $1 a share. When Zilch Consolidated puts out its annual report, the report will say the company earned $1m or $1 a share. The report will be signed by an accounting firm, which says that it has examined the records of Zilch and "in our opinion, the accompanying balance sheet and statement of income and retained earnings present fairly the financial position of Zilch. Our examination of these statements was made in accordance with generally accepted accounting principles." The last four words are the key. The translation of "generally accepted accounting principles" is "Zilch ...

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