Commerce Exam > Commerce Questions > Window dressing is prohibited by the ? A) acc...
Start Learning for Free
Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism?
Most Upvoted Answer
Window dressing is prohibited by the ? A) accural concept B) conventio...
Window dressing is prohibited by the convention of disclosure.
Window dressing refers to the practice of manipulating financial statements and reports to present a more favorable picture of a company's financial position than what actually exists. This is typically done to attract investors, deceive creditors, or mislead stakeholders about the true financial health of the company. It involves the use of accounting tricks, creative interpretation of accounting rules, and selective reporting of financial information.
Convention of disclosure:
The convention of disclosure is a fundamental accounting principle that requires companies to provide relevant and reliable information about their financial position, performance, and cash flows to users of financial statements. It emphasizes transparency and full disclosure of all material facts that may impact the decision-making process of users.
Prohibition of window dressing:
Window dressing is prohibited by the convention of disclosure because it goes against the principles of transparency and reliability. Companies are expected to provide a true and fair view of their financial position, performance, and cash flows, without intentionally misleading or distorting the information presented in the financial statements.
Impact on financial statements:
Window dressing can have a significant impact on the financial statements of a company. Some common techniques used in window dressing include:
1. Manipulation of revenue recognition: Companies may recognize revenue earlier or delay the recognition of expenses to inflate their profits.
2. Creative interpretation of accounting rules: Companies may exploit loopholes in accounting standards to present financial information in a more favorable manner.
3. Selective disclosure of information: Companies may choose to highlight positive aspects of their financial performance while downplaying or omitting negative aspects.
4. Off-balance sheet financing: Companies may engage in off-balance sheet transactions to hide debt or liabilities, making their financial position appear stronger than it actually is.
Consequences of window dressing:
Engaging in window dressing can have serious consequences for companies. It erodes trust among stakeholders, damages the reputation of the company, and can lead to legal and regulatory consequences. Investors and creditors may make decisions based on misleading financial information, leading to financial losses for them. Additionally, window dressing can distort the overall market perception of a company's financial health, which can have ripple effects on its valuation and access to capital.
In conclusion, window dressing is prohibited by the convention of disclosure because it undermines the principles of transparency and reliability in financial reporting. Companies are expected to provide a true and fair view of their financial position, performance, and cash flows to stakeholders, without intentionally misleading or distorting the information presented in the financial statements.
Window dressing refers to the practice of manipulating financial statements and reports to present a more favorable picture of a company's financial position than what actually exists. This is typically done to attract investors, deceive creditors, or mislead stakeholders about the true financial health of the company. It involves the use of accounting tricks, creative interpretation of accounting rules, and selective reporting of financial information.
Convention of disclosure:
The convention of disclosure is a fundamental accounting principle that requires companies to provide relevant and reliable information about their financial position, performance, and cash flows to users of financial statements. It emphasizes transparency and full disclosure of all material facts that may impact the decision-making process of users.
Prohibition of window dressing:
Window dressing is prohibited by the convention of disclosure because it goes against the principles of transparency and reliability. Companies are expected to provide a true and fair view of their financial position, performance, and cash flows, without intentionally misleading or distorting the information presented in the financial statements.
Impact on financial statements:
Window dressing can have a significant impact on the financial statements of a company. Some common techniques used in window dressing include:
1. Manipulation of revenue recognition: Companies may recognize revenue earlier or delay the recognition of expenses to inflate their profits.
2. Creative interpretation of accounting rules: Companies may exploit loopholes in accounting standards to present financial information in a more favorable manner.
3. Selective disclosure of information: Companies may choose to highlight positive aspects of their financial performance while downplaying or omitting negative aspects.
4. Off-balance sheet financing: Companies may engage in off-balance sheet transactions to hide debt or liabilities, making their financial position appear stronger than it actually is.
Consequences of window dressing:
Engaging in window dressing can have serious consequences for companies. It erodes trust among stakeholders, damages the reputation of the company, and can lead to legal and regulatory consequences. Investors and creditors may make decisions based on misleading financial information, leading to financial losses for them. Additionally, window dressing can distort the overall market perception of a company's financial health, which can have ripple effects on its valuation and access to capital.
In conclusion, window dressing is prohibited by the convention of disclosure because it undermines the principles of transparency and reliability in financial reporting. Companies are expected to provide a true and fair view of their financial position, performance, and cash flows to stakeholders, without intentionally misleading or distorting the information presented in the financial statements.
Community Answer
Window dressing is prohibited by the ? A) accural concept B) conventio...
Convention of disclosure
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
|
Explore Courses for Commerce exam
|
|
Top Courses for CommerceView all
Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism?
Question Description
Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism?.
Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism?.
Solutions for Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? in English & in Hindi are available as part of our courses for Commerce.
Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? defined & explained in the simplest way possible. Besides giving the explanation of
Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism?, a detailed solution for Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? has been provided alongside types of Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? theory, EduRev gives you an
ample number of questions to practice Window dressing is prohibited by the ? A) accural concept B) convention of materiality C) convention of disclosure D) convention of conservatism? tests, examples and also practice Commerce tests.
|
|
Explore Courses for Commerce exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up
within 7 days!
within 7 days!
Takes less than 10 seconds to signup