Ask Joey ™ a Question

What does it mean to window dress the financial statements?

Window dressing occurs when the executive team takes specific action just to improve the health of the company on the financial statements. Now, it may depend on what exactly investors or shareholders want to see from the company when they report their financial results.

As the visual below illustrates, if shareholders want to see revenue growth, then the company could offer massive discounts to increase sales in the short-term. The issue is that this is misleading as heavy discounting does not allow for sustained revenue growth.


You might also be interested in...

  • Are you looking for a CPA review course?

    Universal CPA Review is the only CPA review course that has explanation videos for every single multiple choice question. These videos focus on helping identify the big picture and developing a systematic approach to tackling the concept. Our content creators are masters of their craft. They know what it takes to pass the exam and […]

  • How is audit risk impacted with changes in the assessment of inherent risk, control risk, and detection risk?

    Audit risk is the combination of inherent risk, control risk, and detection risk. Remember, the audit team will “assess” inherent risk and control risk. Based on the assessment, then audit team will set detection risk, which ultimately impacts the amount of substantive procedures that must be performed. So in the visual below, you can see […]

  • Scores Came Out: I Just Got a 73% on Audit, Now What?

    Yesterday morning a student interested in trying Universal CPA Review reached out and expressed concern with the fact that they just took audit for the fourth time and scored a 73%.  Audit is a lot of candidate’s “kryptonite” and the reason is because it is sort of like skiing. Easy to learn, extremely hard to […]