Is change in inventory valuation method is a change in accounting estimate or an...
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...
What is Special purpose framework of preparing Financial Statements?
Generally financial statements that are made available to public are prepared using such accounting and reporting framework that caters the general decision making needs of general users and thus called general purpose financial reporting...
What is Specific identification method of inventory valuation?
Specific identification method is just another method to value ending inventory of the business to be reported in the financial statements. IAS 2 permits the use of specific identification method.
According to this method each...
Why closing inventory appears on the credit side of Trading account?
Closing stock or as it is also named as closing inventory is definitely an asset. But trading account is not the same as Inventory account. Inventory, being an asset, should have a debit balance...
What are the Fundamental accounting Assumptions underlying Financial Statements?
Fundamental assumptions, basic assumptions or fundamental accounting assumptions mean the accounting concepts that have been considered and followed while recording financial information. As information needs are different from person to person, entity to entity...
How to record the disposal of revalued non-current asset?
Revalued non-current asset is the one that has undergone revaluation and now that asset is now measured on revaluation basis instead of historical cost basis. To learn more about revaluation model consult our IAS...
What is ABC Analysis?
ABC analysis is one of the known inventory classification methods available in which inventory is categorized in three classes A, B and C where A being most important, B being important and C being...
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...
What is the recognition criteria of equity?
Framework for Preparation and Presentation of Financial Statements (Framework) issued by International Accounting Standards Board (IASB) is one of the important documents. Many of the basic concepts that also form the very foundation of...
What is the difference between Material Misstatement and Material Inconsistency?
Material misstatement refers to such misstatements if present in the financial statements then the financial statements may affect the economic decisions of the users of financial statements. Material misstatements relates to the information included...