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What is window dressing in accounts

Hari Mundayur (CA IPCC) (184 Points)

21 June 2014

What is window dressing in accounts... Its urgent

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13 Replies

Rahul Joshi (Student) (107 Points)
Replied 21 June 2014

It means Manipulation of Accounts. It is also called as Rosier Picture.

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 22 June 2014

agree with above answer woth an addition that such acc. are manipulated very carefully so that no one doubts of it being manipulated.

NILA REJESH P (Chartered Accountant) (815 Points)
Replied 22 June 2014

Fraudulent practice in a company's accounts so that B/S and P/L are better than actual.

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 22 June 2014

Window dressing in accounting is actions taken by management to improve the appearance of a company's financial statements, usually shortly before the end of anaccounting period. Window dressing is particularly common when a business has a large number of shareholders, so that management can give the appearance of a well-run company to investors who probably do not have much day-to-day contact with the business. It may also be used when a company wants to impress a lender in order to qualify for a loan. If a business is closely held, the owners are usually better informed about company results, so there is no reason for anyone to apply window dressing to the financial statements.

Examples of window dressing are:

Cash. Postpone paying suppliers, so that the period-end cash balance appears higher than it should be.
Accounts receivable. Record an unusually low bad debt expense, so that the accounts receivable (and therefore the current ratio) look better than is really the case.
Fixed assets. Sell off those fixed assets with large amounts of accumulated depreciation associated with them, so the net book value of the remaining assets appears to indicate a relatively new cluster of assets.
Revenue. Offer customers an early shipment discount, thereby accelerating revenues from a future period into the current period.
Depreciation. Switch from accelerated to straight-line depreciation in order to reduce the amount of depreciation charged to expense in the current period.
Expenses. Withhold supplier expenses, so that they are recorded in a later period.

pavan kumar (CA Final , CMA Final) (202 Points)
Replied 22 June 2014

https://simplestudies.com/what-is-window-dressing-in-accounting.html

athar ali (Sr. Audit manager) (45 Points)
Replied 22 June 2014

Awesome. ....saroj kumar. ...describe very well

bhuvnesh (ca) (23 Points)
Replied 22 June 2014

Manipulation of accounts to show a better position of financial statements to attract investers or for the purpose of tax evasion for eg. Company show a long term debt as a short term debt this will improve there debt equity ratio this is window dressing

bhuvnesh (ca) (23 Points)
Replied 22 June 2014

sitarama charyulu (manager finance) (27 Points)
Replied 22 June 2014

When an account is manupulated its impact should show the entity as profitable and worth investable. This kind of implementation which lead to false appearance of entire picture of entity. Here the goal of that finance manager and owner will be collecting funds through direct investments.

sadashiv Rupchand Gaikwad (Proprietor) (521 Points)
Replied 22 June 2014

It means accounts are not fair,true and fair.Profit or Assets may be shown very high or low.

Jagnendu more (Articled Assistant) (33 Points)
Replied 23 June 2014

In short window dressing is trying to show better picture of financial statement but in reality it is manipulated and not true and fair....

SAURABH VERMA (Articleship) (32 Points)
Replied 23 June 2014

Meaning in the normal language, one has dressed up window in the manner like you will feel very positive about house but actual condition is not like that or lower then the window showing. same you can imagine about a company, if company is a house, Balance Sheet is window and dress is better liquidity