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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. (Its balance at the bank is positive due to the time it takes for its checks to clear its bank account.) Since the financial statements report the Cash amount appearing in its general ledger account, the financial statements would report a negative amount of Cash. However, the company does not want its December31 balance sheet to report a negative cash balance, since it will be reviewed by many outsiders. To avoid reporting a negative cash balance the company does not make the payments for amounts that should be paid between December26 and December31. This postponement of payments allows its book amount of Cash to temporarily be a positive amount. Then on January2, the company issues checks for all of the amounts that normally would have been paid at the end of December.
In my opinion window dressing should be "If you are borrowing funds prior to the end of financial year from any financial institution / banks which reflects your current asset / bank position sound.
The art (ironically) of covering material facts in financial statements to exhibit a rosy picture of the state of affairs of a business with some deceiving intentions. (for e.g.: for the purpose of raising funds from financial markets) The clear picture is covered with the help of mis-statements, adding fictitious and biased statements, figure manipulations, factual alterations and presentations that is why the word is called " Window Dressing "
Showing losses instead of profits to get tax relief from the tax authortites. In such event it is said the statements are window dressed.
Rightly said window dressing is superficial and temporary strategy cannot last for long.
