The most visible practice of all, printed at the top of nearly every earnings press release.
GAAP (generally accepted accounting principles) is the rulebook official numbers must follow; the net income in the audited statements is GAAP. But companies may also present their own alternative profit measures, "adjusted EBITDA," "adjusted EPS," "core earnings," where they remove items they deem unrepresentative. The removals are management's choice, and management's incentive is a prettier number.
Coffee shop version: your true profit this year was $20,000, hurt by a $15,000 lawsuit settlement and $10,000 of "restructuring" (firing the manager, redoing the layout). You present "adjusted profit: $45,000, excluding one-time items." Reasonable, arguably, if those items never recur. But next year brings a different lawsuit, and the year after another restructuring. "One-time" items that arrive every year are just costs, and adjusting them away is fiction. The most contested adjustment in modern markets is stock-based compensation: many tech companies exclude it as "non-cash," yet as the SBC/FCF entry showed, paying staff in shares is a real cost borne by shareholders through dilution. Excluding it can turn a loss-making company into an "adjusted profitable" one.
Why it matters especially for a beginner: headlines, analyst estimates, and the "beat expectations" theater usually run on the adjusted numbers, so the loudest figure in the room is the discretionary one. The GAAP number sits quieter, lower, and closer to the truth.
How a reader defends: one habit, when you see "adjusted," find the reconciliation table (companies must publish the bridge between GAAP and adjusted) and read what was removed. Ask two questions of every exclusion: is it really non-recurring, and is it really costless? A gap between GAAP and adjusted that yawns wider every year is a company increasingly living in fiction.