Question

Do you agree that window dressing is an advertiser advantage of financial statement analysis give reason in support of your answer

Answer 1

Answer:

Yes

Explanation:

As much as Window dressing makes a financial statement attractive to investors it is not a good practice as it is somehow deceiving of the results recorded in the financial statements.

Window dressing is defined as the manipulation done by management of a company intentionally so as to present a favorable picture of the financial statements in front of users of financial statements.

So with regards to it being an advertisers advantage I will argue Yes because it creates a loophole for Managers to make revenue  of a organization appear larger and attractive for investors. An example of window dressing is postponing of payments to suppliers to the next year while they were supposed to occur in the current year(Remember reporting is done annually).

This will have an effect on the revenue recorded by the organization it will be hire because suppliers have not been paid. Hence the company will not be accurately evaluated resulting in a increase in the share price as people may flock to purchase it shares because of the recorded profits.