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 […]
Why auditor may be unable to obtain sufficient appropriate audit evidence?
Auditor is required to obtain sufficient appropriate audit evidence as it helps auditor reduce audit risk to appropriate level which leads to positive expression of auditor’s opinion in auditor’s report. Although auditor puts every effort in obtaining sufficient appropriate audit evidence, however, this is not always the case and under specific circumstances he may not […]
When Auditor expresses a Qualified opinion?
A qualified opinion is one of the three types of modified opinion that auditor expresses in circumstances where unmodified opinion is not appropriate in auditor’s judgment. Qualified opinion is also known as “except for” opinion. As the name suggests it is a conditional opinion on the financial statements being audited and implies that except for […]
What is age, aged, ageing or aging analysis?
Age analysis is simply a time-based analysis with reference to due date to determine either how much time is left until due date or how much time has passed since due date. Most of the time age or aged or ageing analysis refers to the second type of analysis i.e. how much time has passed […]
What is work in process or work in progress inventory?
Work in process inventory is such asset that is still in the process of completion and not yet ready to be categorised as finished goods.In a manufacturing concern raw materials are converted to finished goods by applying labour and overheads (thus the main reason why labour and overheads cost collectively called conversion cost). However, it […]
What is meant by deviation from controls?
Simply put; an instance or activity that did not occur as per expectations is considered as deviation. For an activity it is not necessary that it must occur as per expectations but also non-occurrence can be considered as deviation. In short, any thing that given rise to conflict between expectation and what actually happened is […]
What is Matching principle in accounting?
Accounting principle that requires costs to be recognized after matching with the revenues earned associated with such costs i.e. the amount of costs recognized must be on equal footings with the revenues recognized. In other words costs shall be recognized at the rate at which benefits are rendered or revenue/income is earned by the entity. […]
What is Accrual basis of accounting?
According to accrual concept or accrual principle or accrual basis of accounting revenues and expenses are recorded in books of accounts when they are earned or incurred and not when they are received or paid in cash. In essence events of business are captured in accounting system when they are actually happening and not when […]
What is Journal and how many types of journals are in accounting?
These are the first formal books in which information regarding transaction is recorded . For the same reason they are also named as books of prime entry or books of original entry or day books. While making a record certain format is followed that only summarizes the information but also keep the value of information […]
What is Retail Price method of inventory valuation?
Inventory is an important asset entity holds and its valuation is critical as it not only affects figures in statement of financial position but also profit calculation. There are several methods to value year end inventory. However financial statements prepared under International Accounting Standards have limited set of methods that can be used to value […]
