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ACCOUNTING ESTIMATES AND THEIR EXAMPLES

Accounting Estimates can best be described as the approximation of the amount to be debited or credited in the respective account, where no precise means of measurement are readily available. Accounting estimates are generally derived from specialized knowledge and...

FINANCIAL STATEMENT ASSERTIONS

What are Financial Statement Assertions for Auditing? Financial Statement Assertions are the claims that are made by the organizations management pertaining to the financial statements. These assertions form a consolidated basis from which external auditors are able...

Types of Auditors

At the end of each financial year, every company is required to get its accounts and books audited. During an audit, your auditor inspects and accumulates all your financial data regarding business transactions that occurred throughout the year and evaluates the...

PURPOSE OF THE INCOME STATEMENT

Income Statement is a financial statement that shows the performance of a given organization over a certain period of time. The main underlying idea behind constructing an Income Statement is to calculate the overall excess of sales revenue, compared to incurred...

PURPOSE OF THE BALANCE SHEET

Balance Sheet is one of the Financial Statements the reveal the financial status of the business at a given point in time. It basically lists down all Assets, Liabilities, and the overall Equity (or Capital) that has been invested into the organization. In other...

Internal Audit: Advantages and Limitaiton

Introduction: Companies have an internal audit to evaluate their internal controls, like corporate governance and accounting processes. The main purpose of internal audit is to provide the company with independent assurance that their risk management, corporate...

What are the variable costs?

Definition: A variable cost is a cost that is related to the number of goods and services that the company produces. A company’s variable cost increases and decreases with the amount of production. If production goes up, variable costs increase and if production is...

What are fixed Costs?

Definition: Variable costs and fixed costs are two of the main costs incurred by a company when producing goods and services. A variable cost varies with the number of goods and services produced, whereas a fixed cost remains the same no matter how much output the...

How to increase or decrease the cost of good sold?

Introduction: Cost of goods sold also referred to as the cost of sales is the cost you incur to make your products or services. Generally, this cost includes direct material, direct labour and production overheads. In a service business, this cost will include the pay...