Cookie Jar Accounting

An accounting practice in which a company uses generous reserves from good years against losses that might be incurred in bad years. cookie jar accounting is a sign of misleading accounting practices.

Watch: Cooking The Books

This gives the sense of "income smoothing", because earnings are understated in good years and overstated in bad years. You may have heard of companies taking special charges or write-downs - that's just another flavor of cookie jar accounting.