Direct verification means verifying an amount or other representation through direct observation e.g. by counting cash. Indirect verification means checking the inputs to a model, formula or other technique and recalculating the outputs using the same methodology. An example is verifying the carrying amount of inventory by checking the inputs (quantities and costs) and recalculating the ending inventory using the same cost flow assumption (for example, using the first-in, first-out method). (FPPFS) Timeliness: Accounting information must be presented in a timely manner to be useful.
Recently, accounting standard-setting body such as the IASB have focused on the issue of how assets and liabilities should be measured (Penman, 2007, p.33). This issue is related to the fair market value accounting as an alternative method against historical cost accounting. The fair market value of an asset (liability) is the amount at which that asset (liability) could be bought or sold (incurred or settled) in a current transaction between willing parties. Historical cost accounting is based on actual transactions, the recorded amounts are reliable and verifiable. This paper describes this measurement concepts and compares them.
Addressing the needs in our market allows our organization to create offerings that are economical, preventative, and responsible. We will only know these needs if we ask the right questions.
BREK-EVEN ANALYSIS Break-even analysis is a powerful management tool. A break-even analysis is a process that use to the determine number of unit that have to sell to recover the capital. In accounting it specifically said that the point where the total cost and total revenue are equal. There will be no gain or loss. It is called as the break-even point.
Moore (2003) explained that individuals are considered financially literate if they are competent and can demonstrate they have used knowledge they have learned. Financial literacy cannot be measured directly so proxies must be used. Literacy is obtained through practical experience and active integration of knowledge. As people become more literate they become increasingly more financially sophisticated and it is conjectured that this may also mean that an individual may be more competent” Many concepts, such as numeracy, share features with financial literacy. However, numeracy applies much more broadly than to just financial matters and represents a much more basic skill set more closely aligned to more general cognitive abilities (OECD, 2005).
The unrealistic expectations of external users of financial statements to assume that an auditor remains totally impartial to client influence is a conclusion drawn from psychological research. The legal system forms the opposite view and has determined that external users should be able to rely implicitly on an auditor’s determination. Accounting standards have set expectations of auditor independence and neutrality. (Max H. Bazerman, 1997) The entire concept of professional scepticism and its application is the true and fair representation of financial statements to the users of these
Using this NPV method, the best project will be the strategic acquisition of Schnapps Brand as suggested by Nigel Humbolt. It is noteworthy to comment that while the capital spending of this project is under the capital spending limits of the company, it also brings diversity in the core business and is promissory in terms of market expansion. With the IRR of 28.7% and projected return of $134 million, accepting this project will provide substantial gain to the revenue figures and confidence of the shareholders. Therefore, on the basis of Equivalent Annuity, the projects will be ranked as follows: 1.
However, the traditional balance sheet whose header and format presented subjects is easier to understand. From the summary of Apple’s Significant Accounting Policy, the biggest one of these major changes is deferred tax assets, which is unrealizable determined by company, would generate the allowance to earnings. If the company realized these amounts, a positive adjustment that reversed the deferred tax asset to earnings would be made. It will have a positive impact on the revenue during the period.
They are: Upper Control Limit Lower Control Limit The companies buy or sell marketable securities only if the cash balance is equal to any one of these. Once the cash balances of a business reaches the upper limit it purchases a certain number of saleable securities that helps them to come back to the desired level.
MN3245K Accounting for Corporate Accountability Assignment 1 Student ID : 100797577 Fair Value Measurement Fair value measurement is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants on the measurement date. Another important criteria in fair value measurement is that all the measurement are market-based but not entity-based and, the measurement requires to take market conditions to account, especially the principal market and it is basically measured using the assumptions that would be used by market participants in order to price an asset or liability. However, under some circumstances, principal markets are not always available.
Accounting policy efficiency and reliability Target Corporation’s accounting policy is both efficient and reliable. However, in relation to the ratios discussed earlier, the use of estimates accounting policy is one that may require additional attention. This policy requires management to make estimates and assumptions affecting reporting amounts in the consolidated financial statements which can link to the payout ratio, the return on assets ratio (ROA), and also the earnings per share ratio (EPS). By comparing the estimates, management makes in comparison to the actual numbers presented in the statement, it would support us to make reflections on numbers that look unusual. All three ratios connect to the assertion accuracy since their amount
A financial audit is an independent, objective evaluation of an organization 's financial reports and financial reporting processes. The primary purpose for financial audits is to give stakeholders reasonable assurance that financial statements are accurate and complete. Most internal audits are not adding value. One reason is that “ongoing compliance burdens and pressure to do more with less” is contributing to the decline in perceived internal audit value.