- November 20, 2021 at 1:10 pm #641165
The company’s suppliers have been paid on 1 June 20X5 and the payment has been included as an unpresented item in the year-end bank reconciliation. This is possible evidence of window dressing which results in understated payables and bank balances.
sir help me understand the concept of widow dressing.November 20, 2021 at 1:24 pm #641169
If a cheque is written out on or before the reporting date – the D/E is Dr Payables/Cr Cash – but if the cheque hasn’t been sent to the supplier – should it be regarded as a payment at all? What if the cheque is still in a drawer in the accounts office? i.e. there has been no attempt to actually the pay the supplier? This is called “window dressing” because it “dresses up” the SoFP by reducing current liabilities – which will affect liquidity ratios in particular.
You don’t say when the year end is – but suppose it was 30 April 20X5 – if the cheque had been sent to the supplier at that time, do you think the supplier would wait for nearly a month before “cashing” it (i.e. paying it into their bank a/c)? Short answer – no. So it would appear then that the cheque payment was withheld from the supplier/delayed, or perhaps “post-dated”. For example, a company writes out lots of cheques at the reporting date but the date they put on the cheque is a later date – which means the supplier cannot present the cheque to their bank until a later date.November 20, 2021 at 4:41 pm #641182
Your hit the point sir.
it is very clear now, Thank u very much Kim.November 20, 2021 at 5:43 pm #641186
You really don’t have to call me “sir” – I’m a mother with two grown-up sons – Kim will do just fine!November 20, 2021 at 6:19 pm #641194
Pardon me; I didn’t mean to offend you.
I confuse English names: I realise now that AA forum tutor is different than the tutor in the lecturer videos. right!!November 20, 2021 at 6:47 pm #641198
I’m not in the least offended – I can “blame” my mother for giving me a “boy’s name” – though to be honest there’s a lot to be said for a name that cannot be shortened (!!!) Indeed I do not do the lectures – some were done before my involvement with OT – and the more recent ones done with my “content”, but by my very good friend and a former colleague, Steve. We are a team 🙂November 21, 2021 at 3:14 pm #641253
All OT tutors are awesome including u. Fact!!
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