What is the difference between Revenue and Receipt?
Revenue, in simplest terms, the benefits entity receives on carrying out its main business activities. Though entity can earn income in many ways but not every activity is its main business activity and not every income is revenue. For example, a furniture manufacturer can earn an income on selling drilling machine at a price higher than its […]
What is ABC Analysis?
ABC analysis is one of the known inventory classification methods available in which inventory is categorized in three classes A, B and C where A being most important, B being important and C being less important. ABC analysis is also known as Pareto Analysis, Pareto rule or 80/20 rule. ABC analysis must not be confused with […]
Exemptions in ACCA for ICAP Students
ICAP and ACCA being the two most prestigious accounting bodies share similar traits and therefore ACCA allows exemptions/relaxation in its examination scheme to ICAP students/affiliates/members. Following read will help you determine your exemptions. Exemptions available to ICAP students/affiliates/members are determined in two steps: Step 1: Determine the year of study. ACCA has classified the years […]
Exemptions in ICAP for ACCA Students
According to latest directive (issued in December 2010) ACCA qualified candidates can claim exemptions in the following subjects only if the relevant conditions are met: Modules Subjects/Tests Additional Conditions Pre-Entry Proficiency Test - A Functional English - A Quantitative Methods - B Introduction to Financial Accounting - C Financial Accounting - C Taxation Exemption will […]
How to record the disposal of revalued non-current asset?
Revalued non-current asset is the one that has undergone revaluation and now that asset is now measured on revaluation basis instead of historical cost basis. To learn more about revaluation model consult our IAS 16 - Property Plant and Equipment resources page. The accounting treatment of disposal of asset that is carried on revaluation basis […]
What is meant by Control Environment in auditing?
In auditing control environment or internal control environment is one of the components of internal control system. Unlike other components, this is rather a resultant of many different factors or activities taking place inside the entity. We know Internal control environment in our daily life as office environment, the term we use to mean how things there. Just […]
What is the accounting treatment of Grants related to Income (Revenue Grants)?
According to IAS 20 government grants are simply assistance to the entity by the government to give or help entity get economic benefits. Such assistance can help either in acquiring or building certain asset easily in which case it is called (capital grant) or to cover certain expense (in which case it is termed as […]
What is Financial Instrument?
Financial instrument in essence is simply a contract that will ultimately result in financial asset in the hands of one party and corresponding financial liability in the hands of another party to the same contract. For example, invoice, bill receivable, promissory note, cheques are well known examples of financial instruments. However, the distinguishing factor between financial […]
What is the difference between Emphasis of Matter paragraph and Other Matter paragraph?
Auditor is required to express his opinion in the form of a written report called auditor’s report. Although auditor’s responsibility and also the purpose of auditor’s report is to convey primarily the auditor’s opinion on financial statements but if auditor believes that there is a matter that must be brought to attention of user of […]
How to account for Temporary Investment Incomes on funds from Specific borrowing?
It is a usual practice that if entity has borrowed funds to finance a qualifying asset then they might be invested temporarily until the funds are needed. This gives rise to a question if these temporary investments are to be deducted from borrowing costs eligible for capitalization or taken to profit and loss account as […]