Definition: Purchase Returns or return outwards can be seen as a process where goods are returned to the supplier because of being defected or damaged. Therefore, the supplier has to receive those goods back and make the subsequent entry in their accounts and ledgers to ensure that they can maximize the overall returns. In the […]
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Definition: A purchase discount reduces the purchase price of certain inventories, fixed assets supplies, or any goods or products if the buying party can settle the amount in a given time period. The purchase discount is also referred to as cash discounts. This is mainly an incentive to the purchasing party to settle the bill
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Introduction: To know the accounting for bad debts recovered, it is necessary to know what bad debts are and how they arise. When a company supplies goods to a customer or another business on credit, the company has to recognize the same amount of receivables in their books as to the value of sold items.
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Introduction: Trade creditors or payables or accounts payable are the outstanding balances to be paid to the creditors or other company parties for different services or products at purchase on credit. Accounts payables are the credit nature class shown under the current liabilities section of the statement of financial position. Accounts payables cannot be written
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What is goodwill? Goodwill is normally considered intangible non-current assets in the consolidated statement of financial position when a company purchases another company where the fair value of the company’s net assets is less than purchase consideration. The difference is considered goodwill. For example, ABC Co purchased 100% of DEF Co shares for USD 500,000
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Overview: In accounting basics, most businesses normally use one of two accounting basics to record accounting transactions in the system, cash basis or accrual basis. It is depended on the nature of the company whether they use a cash basis or an accrual basis. A cash basis is a method that the book is kept
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Overview: Advertising expense is one of the operating expenses that joint with other expenses to operate the business. To perform effective and sufficient testing on this expense, the auditor has to focus on both controlled testing and control validation. Firstly, the auditor has to perform understanding and study on overall picture of advertising expense before
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Definition: The implicit or explicit claims by the management on the preparation and appropriateness of financial statements and disclosures are known as management assertions. It is also known are financial statements assertion or audit assertion. In other words, audit assertions are sometimes called financial statements Assertions or management assertions. It means that management implicitly or
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Introduction: To know about the audit cycle in detail, we need to have a brief concept of what audit is. An audit is an arranged process without any bias, conflict of interest or external pressure that checks or review the books, financial statements, legislation and other authority’s guidelines, and critical disclosures which are important to
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Overview: To perform effective and sufficient testing on borrowings is not only focus on control testing but also focus on control validation by selecting some supporting document for vouching. The auditor could use different methods and amounts of sample to be vouched based on the risk assessment result. There is a good start for understanding
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