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Window dressing of Accounts means:
- a)Presenting accounts in beautiful manner
- b)Showing more losses to avoid Income Tax
- c)Showing more profits to attract Investment
- d)All of the above
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
Window dressing of Accounts means:a)Presenting accounts in beautiful m...
Explanation:
Window dressing of accounts is a practice of manipulating or presenting financial statements in an attractive manner to make them appear better than they actually are. This is often done to impress stakeholders, such as investors, creditors, and regulatory bodies.
The most common reason for window dressing is to show higher profits or better financial ratios, which can attract more investments or loans. Some companies may also use window dressing to avoid income tax or to hide losses from stakeholders.
There are various ways in which companies can indulge in window dressing of accounts. Some common methods include:
1. Overstating revenues: Companies may recognize revenues earlier than they should or may include non-recurring revenues to show higher profits.
2. Understating expenses: Companies may delay recognition of expenses or may understate expenses to show higher profits.
3. Manipulating reserves: Companies may manipulate their reserves to show better financial ratios or to hide losses.
4. Misclassifying items: Companies may misclassify items in their financial statements to present a better picture of their financial performance.
Conclusion:
In conclusion, window dressing of accounts is a practice that can be misleading and can harm the interests of stakeholders. Investors and creditors should be aware of the potential for window dressing and should carefully review financial statements before making any investment or lending decisions. Regulators should also monitor companies for any potential window dressing and take appropriate actions when necessary.
Window dressing of accounts is a practice of manipulating or presenting financial statements in an attractive manner to make them appear better than they actually are. This is often done to impress stakeholders, such as investors, creditors, and regulatory bodies.
The most common reason for window dressing is to show higher profits or better financial ratios, which can attract more investments or loans. Some companies may also use window dressing to avoid income tax or to hide losses from stakeholders.
There are various ways in which companies can indulge in window dressing of accounts. Some common methods include:
1. Overstating revenues: Companies may recognize revenues earlier than they should or may include non-recurring revenues to show higher profits.
2. Understating expenses: Companies may delay recognition of expenses or may understate expenses to show higher profits.
3. Manipulating reserves: Companies may manipulate their reserves to show better financial ratios or to hide losses.
4. Misclassifying items: Companies may misclassify items in their financial statements to present a better picture of their financial performance.
Conclusion:
In conclusion, window dressing of accounts is a practice that can be misleading and can harm the interests of stakeholders. Investors and creditors should be aware of the potential for window dressing and should carefully review financial statements before making any investment or lending decisions. Regulators should also monitor companies for any potential window dressing and take appropriate actions when necessary.
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Window dressing of Accounts means:a)Presenting accounts in beautiful m...
Correct answer is option C because window dressing is the technique used by the companies and financial managers to manipulate financial statements and reports to show more favourable results for a period
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Window dressing of Accounts means:a)Presenting accounts in beautiful mannerb)Showing more losses to avoid Income Taxc)Showing more profits to attract Investmentd)All of the aboveCorrect answer is option 'C'. Can you explain this answer?
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