What are the fundamental principles for the preparation and presentation of financial statements?
Although the accounting treatments and provisions regarding presentations of different important transactions in the financial statements is dealt separate accounting standards. However, in the absence of any specific guidance, provisions of IASB Framework and IAS 1 provides overall guidance for preparation and presentation of financial statements. Before we discuss both documents lets clear out few […]
What is the difference between Intrinsic and Extrinsic rewards?
Division of rewards into two types was recognized for the the first time after Herzberg’s Two-Factors Theory. According to this theory the reasons for employees getting satisfied is one set of factors whereas the reasons for getting employees getting dissatisfied is just another set of factors. If we study the theory deeply we will understand […]
Can direct costs be fixed and indirect costs be variable costs?
Classifying costs as direct or indirect cost is one way of cost classification whereas classifying costs on the basis of their behaviour as fixed or variable costs is just another way of classification of costs. Both classifications are separate and must not be confused together. The cost that can be traced back to a product […]
What are Subsequent Events as per Accounting and Auditing?
i-ask! | Have a question? Ask Tutor! What are subsequent events according to International Accounting Standards and International Auditing Standards? Is the meaning of subsequent events in accounting and auditing is same or different? Please elaborate the what is the difference between subsequent events according to accounting standards and subsequent events according to auditing standards […]
What is the difference between Authorised capital, Issued capital, Subscribed capital, Called-up capital and Paid-up capital?
Authorized capital: The amount of capital with which a company is registered with the registrar of companies (body responsible for registration of companies). It is the maximum amount of capital which a company can raise through shares i.e. shared capital can be maximum up to the authorized capital and not beyond. Due to this reason […]
Is change in inventory valuation method is a change in accounting estimate or an accounting policy?
Before we establish whether it is a change in accounting policy or a change in accounting estimate, lets understand what constitutes a change in accounting policy and accounting estimate. According to IAS 8 a change in accounting estimate is: An adjustment in the following that results from the assessment on the basis of present and […]
What is a non-linear variable cost?
Variable costs are such costs that change with the change in business activity level. For example if production level changes then some costs of production will change as well. This change can either be in the same direction (direct relationship) i.e. if activity increases then cost increases as well OR it can be in the […]
How can we change the Depreciation method?
Most of the non-current assets held by the entities require depreciation because of use devaluation as a result of use of the asset in business operations or other factors. Many different depreciation methods can be used by the entities to record the effect of devaluation. However, IAS 16 Property, Plant and Equipment requires that: In […]
What are the Elements of Financial Statements?
The main purpose of financial statements is to provide financial information to the users to assist them in their economic decisions. The financial statements basically present the financial information in such form that it is not only understandable but also useable. That is why financial statements present the financial effects of different business events that […]
What is the difference between Rule and Policy?
Rules and Policies are sometimes so packed together that it becomes impossible to segregate one from the other. And it varies from one perspective to the other that whether rules are based on policies or policies are based on rules. Therefore, it will be good if we first confine our discussion to an understandable perspective […]