Question

A company may resort to "window dressing" by manipulating the data such as:
I. Inventory valuation
II. Omission of liability for goods purchased
III. Treating a short-term liability long-term debt
IV. Recording in advance cash receipts applicable to next accounting period.

• A. I, III and IV
• B. II and IV
• C. I, II and III
• D. I, II, III and IV

Answer 1

Answer: (C)

I, II and III

Window dressing is term used when management take actions to show the improved financial position to the shareholders. This may be done by various ways, few of them are:

1) Showing higher inventory valuation

2) Omission of liability to show lesser liabilities

3) Showing short term liability as long term liability to show improved short

term financial position.