What transactions are adjusted in profit or loss to prepare statement of cash flows under indirect method?
Statement of Cash Flows or Cash Flow Statement can be prepared using two methods; direct method or indirect method. As under indirect method, income statement or statement of comprehensive income is used to determine cash flows from operating activities therefore, profit or loss figure requires some adjustments. These adjustments are made because entity is required […]
How a loan repayment is disclosed in statement of cash flows?
First things first, a loan can be repaid in number of ways for example in cash, by handing over certain asset or converting debt to shares etc. But if the repayment does not involve cash outflow then such transaction will not be disclosed in the statement of cash flows. A loan installment mostly has two […]
How interest and dividends are disclosed in statement of cash flows?
This often confuse students who are studying Statement of Cash Flows that what is the correct way of disclosing or presenting interest paid or received and dividends paid or received during the period. Many students even after learning how to prepare a cash flow statement remain unclear that under what activity should we show interest […]
Is audit an attestation engagement or direct reporting engagement?
Audit engagement is an attest or attestation engagement rather than direct reporting engagement. As the purpose of audit engagement is to enhance the degree of users of financial statements which is achieved by the expression of opinion by the auditor. This opinion given by the auditor is merely about the fairness of the financial statements […]
What is meant by Assertions in audit or auditing?
Assertions or management assertions in audit or auditing simply means what management claims. For example, if a management states that internal controls are effective then it is a claim or assertion made by management. Similarly, it is primarily the responsibility of the management of the entity to prepare financial statements in which all the assets, […]
What is assurance engagement?
Assurance engagement is an engagement performed by a practitioner to enable himself to express an opinion about the measurement of subject matter against a criteria. Practitioner’s expression of opinion raise the confidence of the users over the measurement as to whether measurement of subject matter is a fair statement keeping the criteria applicable under consideration. Replacing the formal […]
What is an Assurance engagement in auditing?
Assurance engagement is an engagement performed by a practitioner to enable himself to express an opinion about the measurement of subject matter against a criteria. Practitioner’s expression of opinion raise the confidence of the users over the measurement of subject matter subject to the criteria applicable under consideration. To summarize the above formal definition, read through the […]
What is meant by Depreciation?
Depreciation simply means a steady decrease in the value of asset. Often it is studied in relation to the time period over which such decrease in the value has occurred. Therefore, often it is also defined as the value lost by the asset over its useful life i.e. the time period for which it was subjected […]
What is NIFO inventory valuation method?
NIFO - Next in, First out is an inventory valuation technique in which issues to the production hall are valued at the current market price i.e. current cost or replacement cost instead of the cost at which material was bought i.e. historical cost. This valuation method attempts to keep the production cost accurate according to […]
What are different inventory valuation methods?
There are numerous valuation techniques to value the inventory or stock. However, here is the short list of those which are known. To learn more about each method, click the name! Specific identification method FIFO - First in, First out method LIFO - Last in, First out method HIFO - Highest in, First out NIFO […]
