Day: December 26, 2021

If the trial balance of the General Ledger agrees to the inclusion of the balance in the total accounts governing the Bought Ledger and the Sales Ledger (instead of individual balances of accounts contained therein), it would not necessarily prove Read More …

Nature and Purpose: Since routine checks cannot be depended upon to disclose all the mistakes or manipulation that may exist in accounts, certain other procedures also have to be applied. These collectively are known as overall tests. As stated earlier, Read More …

Until recently, test checks were applied only for confirming balances in a few nominal accounts; those of stocks and stores, amount of sale and other similar records relevant to trading transactions, which were voluminous but of similar nature. Now a Read More …

The auditor should obtain a certificate from the client that all the liabilities which had accrued due till the close of the year have been taken into account and contingent liabilities, if any, have been fully disclosed. It should be Read More …

The general make up of fixed asset account is: opening balance, additional adjustment of profit or loss on sale and on account of depreciation. Every entry which does not conform to this pattern should be inquired into it should be Read More …

It is comparatively an easy matter to verify different forms of income earned by the client during the year in totality. In respect of some of the incomes which are collected regularly, e.g., rents on lockers in the case of Read More …

The structure of each expense account should be thoroughly scrutinised and the distribution of the total expense over different methods comprised in the period under audit. Where there are significant variations between different months, the cause thereof should be ascertained. Read More …

There are two classes of outstanding assets the adjustment where of has to be examined; first, items accruing but not recorded in books and second, expenditure already incurred, a part or whole of which relates to a period subsequent to Read More …

1. Purchases : In some instances, invoices relating to purchases of goods that have been taken into stock are received too late to be included in the Purchase Day Book of the closing month. As a result, those will be Read More …

1. Bought Ledger : The structure of every account in the Bought Ledger is : opening balance, credits on account of goods purchased and debits raised in respect of returns, allowances and discount receivable, advances paid against goods, payments and Read More …