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Entering advance entry in the books without paying them

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Querist : Anonymous

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Querist : Anonymous (Querist)
27 June 2013 Hi Experts,

Just had a query, a company is entering advances in the name of vendor without intention to pay them off, what that means. the entry they are passing in books

Advance - Dr
To, Creditors.

Is this something suspicious
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Anil Sankar V

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Anil Sankar V (Expert)
27 June 2013 To show huge advances from the customer,
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Querist : Anonymous

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Querist : Anonymous (Querist)
27 June 2013 But why ?
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Vivek Hebbar

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Vivek Hebbar (Expert)
28 June 2013 Dear Querist

This is a typical case of window dressing. If the intention is not to pay then the company is building its assets may be with the intention of getting bank finance or with the intention of luring some equity investor since the balance sheet looks strong with big assets figures.
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