Is ‘Cost of goods sold’ a Product cost or a Period cost?
Before we discuss under what heading should we classify cost of goods sold, let’s first of all clear out our minds for the terms inventoriable costs and period costs with a quick review. You can the answer on difference between period costs and product costs in good detail here. Inventoriable costs (Product cost) or Product […]
What is the difference between Product cost and Period cost?
Product costs or Inventoriable costs are all such costs that form part of the inventory.These are basically such costs that relates directly to the products and are incurred to produce such products and also include the costs that are incurred to bring these products into saleable condition (or simply present location and condition). Examples are […]
What are different types of audit reports or auditor’s reports?
The nature and type of reports issued by the practitioner depends on the type of assurance engagement. However we will be speaking strictly in context of audit engagement as the question is about the types audit reports. We can classify audit reports in number of ways but usually audit reports are classified n TWO broad […]
What is the difference between Objective of audit and Purpose of audit
Although the terms objective and purpose are mostly used to mean the same and are used interchangeably but under International Auditing Standards (ISAs) the purpose of audit and objective of audit is NOT the same thing. Under ISAs the term purpose of audit simply means why audit is conducted. Whereas objective of audit means what […]
What are different types of standards under standard costing?
Standard in simple words is a measure of what is expected to take place under the current or anticipated circumstances. Another way of defining standard is that it is something that is predetermined or planned and management wishes that actual results equate to standards. Standards are one of important quantitative tools in the hand of […]
What is Detection risk?
According to International Auditing Standards detection risk is defined as follows: The risk that the procedures performed by the auditor to reduce audit risk to an acceptably low level will not detect a misstatement that exists and that could be material, either individually or when aggregated with other misstatements. In simple words detection risk is […]
What is the difference between Hot and Cold reviews in auditing?
According to ISQC 1 it is the objective of the firm to establish and maintain a system of quality control to provide it with reasonable assurance that: The firm and its personnel comply with professional standards and applicable legal and regulatory requirements; and Reports issued by the firm or engagement partners are appropriate in the […]
How Professional judgement and Professional skepticism are different in application?
Professional Skepticism and Professional Judgment both are required to conduct the assurance engagements properly. But both are two separate requirements and are not one and the same and are different in their meaning and also in their application. But surely both complement each other in auditor’s work. Professional Skepticism The auditor is required to maintain […]
What is the difference between Material effect and Pervasive effect in auditing?
The misstatements and their effects of great importance and auditor consider these effects for their implications on financial statements and auditor’s report. The auditor considers whether uncorrected and undetected misstatements have material and pervasive effect or just material but not pervasive while drafting auditor’s report. Although auditor considers these two characteristics of misstatements collectively to […]
What is the difference between Due Care and Due Diligence in auditing?
In IESBA Code of Ethics for Professional accountants, one of the fundamental principles is the principle of Professional competence and due care. Practitioner (auditor) is required to conduct assurance engagement with due care which ultimately requires auditor to act diligently. Due care simply refers to the degree of care which is expected from a reasonable […]
