Download - Final Afm Ppt
-
8/8/2019 Final Afm Ppt
1/24
LIMITATIONS OFFINANCIAL STATEMENT
AND WINDOW DRESSING
PRESENTED BY:
AKANKSHA SINGH
ANOOLEKHA ATRI
ASHISH SHUKLA
MUKESH KUMAR
RICHA MAKIN
-
8/8/2019 Final Afm Ppt
2/24
CONTENTS
FINANCIAL STATEMENT
LIMITATIONS OF FINANCIAL STATEMENT
WINDOW DRESSING
-
8/8/2019 Final Afm Ppt
3/24
-
8/8/2019 Final Afm Ppt
4/24
EVERY FIRM LIKES TO MEASURE THE PERFORMANCE OF ITS
BUSINESS OPERATIONS IN TERMS OF PROFIT OR LOSS.IT ALSO LIKES
TO KNOW THE VALUE OF ITS ASSETS AND LIABILITIES ON THE
CLOSING DATE OF ACCOUNTING PERIOD.
THUS THE STATEMENT PREPARED TO ASCERTAIN THESE ARE
KNOWN AS FINANCIAL STATEMENT. THEY ARE THE FORMAL
RECORDS OF FINANCIAL ACTIVITIES OF A BUSINESS , PERSON OR
ORGANIZATION.
FINANCIAL STATEMENTS PROVIDE AN OVERVIEW OF A BUSINESS OR
PERSONSS FINANCIAL CONDITION IN BOTH SHORT AND LONG TERM.
FINANCIAL STATEMENT
-
8/8/2019 Final Afm Ppt
5/24
TYPES OF FINANCIALSTATEMENT
BALANCE SHEET
INCOME STATEMENT
-
8/8/2019 Final Afm Ppt
6/24
It is referred to as statement of financialposition or condition, reports on a companysassets and liability and net equity as of a given
point in time.
BALANCE SHEET
-
8/8/2019 Final Afm Ppt
7/24
INCOME STATEMENTS:
It is referred to as profit and loss statement,
reports on a companys income, expenses andprofits over a period of time. Profits & loss
account provide information on the operation of
the enterprise. These includes sale and thevarious expenses incurred during the processing
state.
-
8/8/2019 Final Afm Ppt
8/24
LIMITATIONS OFFINANCIAL
STATEMENT
-
8/8/2019 Final Afm Ppt
9/24
measures only the quantitative factsof the business in terms of money.
change in managerial position are notdisclosed.
1. IGNORES QUALITATIVEASPECTS
-
8/8/2019 Final Afm Ppt
10/24
2. BASED UPONCONVENTION AND PRACTICE
Financial statements are prepared according tothe practices adopted by individual firms.
Accounting is criticised for its convention ofconservatism
-
8/8/2019 Final Afm Ppt
11/24
3.IGNORESHUMAN RESOURCES
Financial statements do not accord anyweightage to human resources.
Doesnt reveal the non financial items likeefficiency of management, loyalty of work force,quality of product.
-
8/8/2019 Final Afm Ppt
12/24
4.IGNORESPRICE LEVEL CHANGES
Changes in the price are quite obvious underinflation and depression but financialstatements ignores it.
Changes are not incorporated in financialstatements.
-
8/8/2019 Final Afm Ppt
13/24
-
8/8/2019 Final Afm Ppt
14/24
6.FAILS TO DISPLAYPROFITABILITY,EFFICIENCY AND
FINANCIAL SOUNDNESS OF THE
BUSINESS.Financial statements do not presents the financialratios concerning the performance of the business.
-
8/8/2019 Final Afm Ppt
15/24
7. FAILS TO HIGHLIGHT THEINFLOW AND OUTFLOW OFFUNDSIn order to highlight the sources and application offunds, a firm has to prepare funds flow statement.
As financial statements fail to display it.
-
8/8/2019 Final Afm Ppt
16/24
THEBUSINESS ISBADBUT YOUCAN DRESS IT UP WITH
SOMETHING TO SHOW IT TOBE
HEALTHY-WINDOW DRESSING
-
8/8/2019 Final Afm Ppt
17/24
Accounting Data
Account Balancing
Financial Statement Prep
First Level ofCooking
Final Cooking
Window Dressing
-
8/8/2019 Final Afm Ppt
18/24
AN ADJUSTMENT MADE TO PORTFOLIO OR
FINANCIAL STATEMENT TO CREATE FALSEAPPEARANCE.
ITS A BAD PRACTICE AND A LIMITATION TO
FINANCIAL STATEMENTS.
-
8/8/2019 Final Afm Ppt
19/24
Window dressing refers to attempts bybusiness to present its accounts in the best
light
Has become more of a necessity as pressureto please shareholders
It is NOT illegal
-
8/8/2019 Final Afm Ppt
20/24
-
8/8/2019 Final Afm Ppt
21/24
Assets are valued at historical cost less an
estimated depreciation
Other possibilities include cost, netrealizable value, replacement cost, price level
adjusted
Not all assets appear
Human capital, internally generatedgoodwill
Could be argued that approach is more
conservative
-
8/8/2019 Final Afm Ppt
22/24
METHODS OF WINDOW DRESSING
SALE & LEASEBACK
SHORT TERMBORROWING
CHASING DEBTORS
CHANGING DEPRECIATION POLICY
-
8/8/2019 Final Afm Ppt
23/24
UNLESS YOU HAVE ACLOSER LOOK ,
ITS IMPOSSIBLE TO GET
RID OF IT.
-
8/8/2019 Final Afm Ppt
24/24
THANK
YOU