Effect of Creative Accounting on Liquidity Ratios in Selected Commercial Banks in Owerri, Imo State, Nigeria

Abstract

The issues and challenges of creative accounting in banking industry have attracted a lot of arguments among accountants. It is as though Nigerian population is divided into two opposing fragments-one fragment (accountants and managers) in support of creative accounting and the other group (users of financial report), opposing the act. This paper aims to find the impact of liquidity ratios in Owerri, Imo State. Result finds that accelerated depreciation has no effect on acid-test ratios as well as Deferred Expenses have no effect on current ratios. Questionnaires structured in Likert Five-scale points were used to gather data. Responses of bank accountants were tabulated and Analysis of Variance (ANOVA) was run on the responses to determine the extent to which these responses vary using SPSS 20.0, while the average responses were measured on the Likert scale for test of hypothesis. From mean responses on the Likert scale, creative accounting had effect on liquidity ratios of selected firms. Since creative accounting deals with fortification of document, it is of the opinion that it should be discouraged.