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<p><em>Window dressing</em> in accounting is actions taken to improve the appearance of a company's financial statements. These actions are usually shortly before the end of an accounting 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.</p>
A company can use window dressing when preparing financial statements to improve the appearance of its performance or liquidity. In this case, window dressing may consist of changing asset depreciation or valuation policies, making short-term borrowings, or engaging in sales and leaseback transactions at the end of a period. By doing so, management embellishes the company’s results or liquidity and obtains some benefits.
Window dressing refers to actions taken or not taken prior to issuing financial statements in order to improve the appearance of the financial statements. Here is an example of window dressing. A company operates throughout the year with a negative balance in its general ledger Cash account.
Window dressing is to make the nagative balances into possitive before the issuance of financial statements like;
Negative bank balance = Reversal of outstanding and PDC Cheques to creditors accounts, bank balance will become possitive and so on
A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.
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The actions taken to improve the appearance of a company's financial statements. These actions are usually shortly before the end of an accounting period.
If any adjustment is being made in financial statement to reflect the desired facts and figures to reader of financial statement is "Window Dressing"
Window dressing is basically refers to the action of the Business Manager Who is trying to exaggerate the business performance for the current period ( Short Term).Windows dressing is usually done through several means i.e. Recognition of future sales in current period, delaying in accounting the current period expenses, Clearing payable from accounts as discount, wrongly capitalizing an expense.This is a misleading action for the Management and is not recommended.
Window dressing refers to actions taken or not taken prior to issuing financial statements in order to improve the appearance of the financial statements.
Window dressing is to make the nagative balances into possitive before the issuance of financial statements like;
I agree with the answer given by Mir Mujtaba Ali Internal Audit Manager
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