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What is financial statement window dressing? What are the likely areas where Management can window dress in a financial statement?

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تم إضافة السؤال من قبل Abdulrasheed olabode , Senior Internal Auditor , IHS TOWERS LIMITED
تاريخ النشر: 2017/03/04
Fadi Chammas
من قبل Fadi Chammas , Accounting & Finance Manager , Galler

One word to describe window dressing is Embellishment, actions taken to improve the appearance of a company's financial statements

areas where Management can window dress in a financial statement?

  • 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.
  • 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.

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