Question

What would be the motive to misstate the financial statements of a private company?

Answer 1

There are various reasons due to which a private company misstate the financial statement:

one most important aspect due to which a private company misstate it financial statement is that management want to show lower its net income to reduce the tax burden to improve their cash flow.

Another important aspect of misstate the financial statement is that if financial assets are inflated it will show a sound financial position of the company for availing credit from financial statement and to invite venture capitalist to investment more funds into business