Differentiate between Goods Received Note (GRN) and Goods Despatch Note (GDN)?
In order to control the activities of the business and have operations running effectively management is responsible to have controls in place. Without controls accountantability will not be possible. One of the ways by which controls can be implemented is by using control documents (sometimes known as source documents as some are used to initiate […]
What is Continuous stocktaking?
Stocktaking is simply physical checking or counting of inventory held by the entity and by continuous stocktaking it means inventory counts that are undertaken on regular basis. Continuous stocktaking method is used over periodic stock counts to increase accuracy especially for the goods which are high value or have high turnover i.e. fast moving inventory/goods and […]
Why auditors may fail to detect fraud?
Primary responsibility to prevent and detect fraud is upon management or those who are charged with an authority of management oversight (also known as those charged with governance). To achieve this objective it is their responsibility to have an effective internal control system in place which not detect fraudulent activities but also prevent them from […]
What are limitations of External audit?
Limitations mean restrictions or factors that limit the effectiveness of audit engagement and limits the auditor to restrict only to provide reasonable assurance. Most of the time when we refer to limitations of external audit we mean inherent limitations of external audit engagement or in other words inherent limitations of assurance engagement. But it does […]
Can auditor provide absolute assurance if ideal situation is given?
We must be clear that auditor is neither expected nor required by the International Standards on Auditing to provide absolute assurance i.e. auditor is not expected even to put an effort to be able to provide absolute assurance. Auditor is unable to provide absolute assurance because of inherent limitations of audit therefore, auditor is at […]
What is Business risk?
Doing day to day business involves carrying out numerous activities of different nature. It involves all kinds and sorts of business transactions. Some of these activities gets accounted for and some are simply dealt out of books. However, everything business do has inherent benefits and inherent problems. And it is the job and responsibility of […]
Is Accumulated depreciation an expense account or an asset account?
Before this question is answered specifically it will be good if we clear an important connected concept of historical cost. According to historical cost concept, assets are recognized and reported in the financial statements at the amount that were paid at the time of acquisition of the asset. And this amount remains unchanged for years […]
What is a non-cash expense?
Non-cash expenses are such expenses that do not involve real cash outlay or against which no real cash outflow has taken place at least in the period in which such expense has been reported. And as they are recognized as an expense they will cause entity’s retained earnings to decrease but such expenses will not […]
What is the difference between depreciation account and accumulated depreciation account?
Capital assets also known as fixed assets are simply such assets which are used over a period longer than one year. Although real cash outflow takes place for the whole price at the time of acquisition of such assets however, for reporting purposes such costs are not expensed out in the year of purchase of […]
What is meant by Temporary accounts?
Temporary account is in simple words are such accounts that are maintained only until the end of particular accounting period (which can of any length of time i.e. a week, a month, two months, a quarter, semi annual or annual). And when such accounting period lapses, these accounts are closed and nothing of such accounts […]
