Abstract:

The financial statements represent a key output of the accounting and provide information about the financial situation and performance of the company and their changes. Whether an enterprise can transform inputs into outputs and make profits is a fundamental question in determining its performance. In practice, however, there may be opportunities to influence the accounting information through the use of different methods and techniques, and as a result, the financial statements lose their function and misrepresent the accounting data and manipulate the profit. Earnings manipulation is discussed in the phenomenon of earnings management, which is a topic in the world of finance. In the Slovak Republic, this phenomenon has not been examined in detail by any author. This article discusses the application of earnings management models in Slovak Republic. In the analysis, we focus specifically on accrual-based earnings management models because the application of the accrual principle in accounting forms the core of financial accounting. For internationally recognized accounting policies as well as national accounting legislation, the accrual principle is the fundamental principle of double-entry accounting, according to which all transactions and events are accounted for and reported at the time of their occurrence regardless of cash flows. The application of this principle will make it possible to take into account the performance of an enterprise over some time to the maximum extent possible, not just the cash flows generated from the individual activities of the enterprise.