Accounting concept and records-consistency, Auditing

What fundamental accounting concepts must you keep in mind in preparing to carry out your audit?

Accounting Concept and Records

Fundamental Accounting concepts are covered in IAS-1 Presentation of Financial Statements.

Matching Concepts

There is basic assumption that all costs have been matched to the revenues they helped to produce from balance sheet point of view this means that accrual, prepayments will be necessary to ensure that costs and revenues are matched correctly.

Going Concern

The financial statements of the business should have been prepared on going concern basis. This primarily affects the value of the assets in statement of financial position of valuation on a breaking basis, where assets are sold individually for guide return would be much lower than their going concern valuation.

Consistency

Accounting Policies and procedures should be applied consistently from year to year and in relation to similar items with in financial statements. This mean that is expected that one say 2 similar fixed assets are accounted in same way in financial statements.

Prudence

The financial statements should have beet prepared on prudent basis, with all anticipated losses provided for but no profits anticipates. Where the prudence and matching concepts come into conflict then the prudence concept should prevail.

Materiality

Financial statements should disclose all material items. An item is material if its non disclosure, misstatement or omission would be likely to affect evaluation on decision of users.

Substance Overform

It requires that assets acquired but business under finance lease arrangement should be recorded in its books along with obligations there against.

Posted Date: 3/14/2013 2:31:17 AM | Location : United States







Related Discussions:- Accounting concept and records-consistency, Assignment Help, Ask Question on Accounting concept and records-consistency, Get Answer, Expert's Help, Accounting concept and records-consistency Discussions

Write discussion on Accounting concept and records-consistency
Your posts are moderated
Related Questions
Q. What is Withholding Allowance? Withholding Allowance -Every taxpayer is allowed to claim a withholding allowance, which exempts a certain amount of wages from being subject

#what are the procedures of conducting audit for the first time#

(a) Define each of the following four concepts. -Master Data Management -Data Quality -Data Governance -Cloud Computing Explain how they relate to the various Busine

Question 1: Auditing standards regulate the audit profession. a) Explain the importance and role of audit standards. b) Lists four of the standards issued by the INTOSAI

Audit of Current Assets Verification of Work and Stocks in Progress Authoritative documents: IAS 2/ISA 500/501 IAS 1 Preparation of financial statements requires inv

The Need for an Audit If you take an example of a modern large liability company, we can clearly distinguish between the providers of funds and those who control those funds. The

Advantages of Fixed Assets Register There are several advantages if the register properly maintained: a) There is an independent record of all fixed assets showing particul

Necessity of Transactions with Related Parties Transactions along with related parties are essential for several reasons: (a) Several financial scandals including related p

Trademarks and Patent Trademarks and then written off over their useful lives and patents may be capitalized along with any renewal fees being charged to revenue. Whether a tr

Please present an analysis of the attached case. Your analysis should be in the form of a memo not to exceed four pages plus appropriate exhibits. The memo should present your