What is NRV – net realizable value in accounting?
Definition NRV – net realizable value in accounting is a widely used inventory valuation method. It aims to calculate the value realized by selling some … Read more
Accounts Receivables Factoring
Definition Accounts receivables factoring is designed to finance ventures without increasing leverage in the business. It involves selling of invoices to third parties at discount … Read more
Accounting for property plant and equipment (PPE)
Accounting for property, plant, and equipment is one of the technical areas where accountants often face a challenge. In this article, we have discussed different … Read more
What is plowback ratio?
The plowback ratio is used to identify the earnings that are retained for business after paying the dividends. It is used to calculate the profit … Read more
What is the Retention ratio?
Definition The retention ratio reflects proportion of earnings retained by the business. These are the earnings that have not been distributed among shareholders. Instead, these … Read more
What is common stock in balance sheet (all you need to know)
Definition Common stock represents your ownership in the company. These rights/power include an appointment for the board of Directors, formation of the board policies, and … Read more
Interest in Drawings (detailed explanation)
What is Interest on Drawings? We need to calculate interest on drawings when partner withdraws certain goods/assets from the business for a temporary period and … Read more
What is a cut off concept in accounting/audit?
The cut off concept in accounting aims to ensure events and transactions are posted in the correct accounting period. It helps to calculate profit/loss without … Read more
What is the Realization Concept in Accounting?
Definition The realization concept or the revenue recognition principle in accounting is a method used by accountants for recording revenue earned by the business. This … Read more
Corporate Governance
Definition of corporate governance Corporate governance refers to a system of governance. It aims to monitor and control strategic aspects of the board activities, decision … Read more
Dealing with a bad manager: (5 tips for handling a bad boss)
Dealing with a bad manager can be a serious mental hazard. All the time, your boss prefers his favorite subordinate who also exceeds the deadline … Read more
Conversion Cost in Accounting
Definition Conversion cost is the cost required to convert raw material into finished goods. It includes direct labor and manufacturing overheads. Explanation Whatever product you … Read more
What is an audit program?
Definition The audit program is a detailed action plan for the audit team. It sets a direction for an audit team to perform audit procedures. … Read more
Qualities of audit evidence
Auditors collect audit evidence during fieldwork. If audit evidence is sufficient and appropriate, they issue a clean audit report. Sufficiency of audit evidence refers to … Read more
What are net purchases in accounting/business?
Definition Net purchases refer to total purchase after deducting discount obtained from supplier, goods returned to the supplier, and allowances made on the purchase. This … Read more
What is audit risk (functional aspects)
Definition The audit risk is that auditors might issue an inappropriate audit report. It’s a prime business risk for audit firms that might bring reputational … Read more
Audit report modification/changes
Audit report modification is when auditors need to change/modify their audit opinion. The audit report can only be changed/modified in line with the accounting standard. … Read more
What is audit report?
The audit report is a document attached with the financial statement. In this report, external auditors state their opinion about the financial statement prepared by … Read more
What is directional testing in an audit?
Definition Directional testing is when auditors obtain sufficient and appropriate audit evidence from a specific direction. The directional testing can be either debit or credit … Read more
What is going concern assumption?
Definition Going concern assumption is used by businesses to prepare the financial statement. This assumption impacts the accounting treatment, valuation, and presentation of various account … Read more