ā Summarise the pay register on a month wise basis. ā Perform the analysis of month wise variance of gross pay and inquire reasons for major changes which are not substantiated by change in head count or payscale. ā Perform head count reconciliation procedure to match the number of employees each month i.e. (Opening employees…...
An entity should report separately information about an operating segment that meets any of the following quantitative thresholds: ā Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10% or more of the combined revenue, internal and external, of all operating segments. ā The absolute amount of its reported…...
ā Journal entries made to unrelated, unusual, or seldom-used accounts. ā Journal entries made by individuals who typically do not make journal entries. ā Journal entries containing consistent ending numbers (ā999ā). ā Journal entries with line items containing specific wording. ā Unbalanced journal entries. ā Journals recorded at the end of the period or as…...
ā List of all bank accounts should be obtained from client ā Independent Bank Confirmations are sent to all banks (with whom the client holds an account) to ensure the existence & valuation of the balance at year end. ā Reconciling of balance as per books with the Bank confirmation and bank statement to ensure…...
ā Reconciling the FAR (Fixed assets register) and GL to ensure the accuracy of the books of accounts. ā Recalculation of the depreciation as per useful life (prescribed in Schedule II of Companies Act, 2013 or as per management estimate) and scrap value. ā TOD of Additions and disposals to ensure the completeness of the…...
ā Ledgers, Agreements and other related supporting documents are obtained from the client to ensure the completeness & accuracy transaction ā Perform ageing analysis and check whether there is any need for making provision for doubtful debts for long outstanding balances. ā Independent external Confirmations are sent to the customers and their response are noted…...
Cutoff procedures are undertaken to check whether all income and expenses are reported in the correct accounting period. Simply put, Cut off procedures are performed for separation of transactions from one period to another (say, upto 31st March and after 31st March). This ensures that transactions and events are recorded in the correct accounting period…...
ā Reporting to Central Goverment: As per Section 143 of Companies Act, 2013 if auditor has reason to believe that offence involving fraud (of amount Rs 1 Cr or more) has been committed against the Company by its officers or employees, it is to be reported to the CG. Fraud below this threshold is reported…...
Special Purpose Report: A special-purpose financial report is intended for presentation to a limited group of users or for a specific purpose. For example, special-purpose financial statements are prepared for tax reporting, bank reporting, and industry-specific reporting. Most SMEās (Small to Medium Enterprises) and not for-profit entities will produce a simple profit and loss and…...
Shall apply to every company including a foreign company except (i) a banking company (ii) an insurance company (iii) a company licensed to operate under section 8 of the Companies Act (iv) a One Person Company and a small company (v) a private limited company, not being a subsidiary or holding company of a public…...
Materiality are of 3 types: Overall Materiality (OM)- The level which represents the significant level in the companyās financial statements, which can influence the decision making of the users of the companyās financial statement as a whole. Performance Materiality(PM) – The amount set by us as auditor at less than the Overall Materiality, so that…...
The materiality threshold in audits refers to the benchmark used to obtain reasonable assurance that an audit does not fail to detect any material misstatement that can significantly impact the economic decision of users of financial statements. Determining materiality involves the exercise of professional judgment. A percentage is often applied to a chosen benchmark as…...
Account balance assertions apply to the balance sheet items, such as assets, liabilities, and shareholdersā equity. There are four types of account balance assertions: ā Existence: The assets, equity balances, and liabilities exist at the period ending time. ā Completeness: The assets, equity balances, and the liabilities that are completed and supposed to be recorded…...
Transaction level assertions are made in relation to classes of transactions, such as revenues, expenses, dividend payments, etc. There are five types of transaction-level assertions: ā Occurrence: Transactions that are recognized in the financial records have occurred, i.e.,did it really happen? ā Completeness: Transactions that are completed and supposed to be recorded have beenrecognized in…...
The Companies (Auditor’s Report) Order (CARO) is a regulatory framework in India that mandates the reporting requirements for statutory auditors of companies. The latest amendments to CARO, known as CARO 2020, introduced certain changes related to Corporate Social Responsibility (CSR) reporting. Here are some key provisions: 1. Assessment of CSR Expenditure: Under CARO 2020, auditors…...
In addition to financial considerations, there are several non-financial factors that organizations should take into account when making a make or buy decision. These non-financial considerations play a significant role in determining the optimal choice and ensuring the long-term success of the decision. Here are some key non-financial factors to consider: 1. Core Competencies: Assessing…...
Marginal costing and standard costing are two different approaches used in cost accounting to analyze and control costs. Here’s a brief explanation of the differences between the two: 1. Definition and Focus: – Marginal Costing: Marginal costing focuses on analyzing the behavior of costs in relation to changes in production volume. It segregates costs into…...
The audit committee is typically entrusted with the approval and oversight of related party transactions (RPTs) due to its specific role and responsibilities within an organization. The audit committee is a subcommittee of the board of directors and is composed of independent directors who possess financial expertise and knowledge of corporate governance practices. There are…...
When evaluating the make or buy decision, it’s crucial to consider not only financial factors but also non-financial considerations that can have a significant impact on the decision-making process. Some key non-financial considerations include: 1. Control and Flexibility: Making a product or performing a service in-house gives the organization greater control and flexibility over the…...
As a relationship person, when onboarding a new corporate client, the key ratios I would look into would primarily be liquidity and profitability ratios. Liquidity ratios such as the current ratio and quick ratio would help assess the company’s ability to meet its short-term obligations. These ratios indicate the availability of liquid assets to cover…...
In the banking industry, the roles of a credit manager and a relationship manager are distinct but interconnected. While both roles involve client engagement and managing client relationships, they focus on different aspects of the banking process. A credit manager primarily deals with the analysis and evaluation of creditworthiness and risk associated with lending activities…....
Capital expenditure refers to the expenses incurred by a company for acquiring, improving, or extending its fixed assets, which are expected to provide benefits over multiple accounting periods. These expenditures are capitalized on the balance sheet and are typically large in nature. Examples of capital expenditures include the purchase of property, plant, and equipment (PP&E),…...
In the case of export of goods, the recognition of revenue follows certain principles and guidelines outlined in accounting standards. Revenue from export sales is typically recognized when the following criteria are met: 1. Identification of the contract: The existence of a legally enforceable contract between the exporter and the customer is essential. The contract…...
Audit is conducted to provide assurance and enhance the credibility of financial information presented by an organization. It serves several important purposes: 1. Compliance: Audit ensures that the financial statements and records of an organization comply with applicable laws, regulations, and accounting standards. It helps in verifying the accuracy and completeness of financial information, thereby…...
Planning and execution are essential components of the audit process. Here’s an overview of how they are approached: 1. Planning: Audit planning involves understanding the client’s business, identifying risks, and developing an audit strategy. This includes: – Client Assessment: Assessing the client’s industry, business operations, and internal control systems to understand the key risks and…...
Statutory audit offers several benefits that make it an attractive choice for professionals, especially in the context of Big 4 firms: 1. Professional Growth: Statutory audit provides an opportunity to work with diverse clients across various industries, which enhances professional growth and expertise. It allows auditors to gain a deep understanding of different business models,…...
Managing a team and client effectively requires a combination of strong leadership skills, effective communication, and a customer-centric approach. Here are some key strategies for managing both aspects: 1. Clear Communication: Maintain open and transparent communication channels with both your team members and clients. Clearly articulate expectations, project goals, and deadlines to ensure everyone is…...
FP&A stands for Financial Planning and Analysis. It is a crucial function within an organization that focuses on financial forecasting, budgeting, and analysis to support strategic decision-making. FP&A professionals work closely with senior management and other departments to develop financial plans, evaluate performance, and provide insights into the financial health of the company. In FP&A,…...
During my articleship, I encountered various challenges that allowed me to grow both personally and professionally. One of the key challenges I faced was managing tight deadlines and multiple client engagements simultaneously. As an article trainee, I had to balance my time effectively to ensure timely completion of audit assignments and other responsibilities. Another challenge…...
During my articleship, my focus was primarily on gaining practical experience and exposure in the field of auditing and financial accounting. I worked under the guidance of experienced professionals in a reputed firm, which provided me with valuable opportunities to enhance my skills and knowledge. One of my main areas of focus during my articleship…...
During the audit of the Procurement-to-Pay (P2P) process, there are several common issues or observations that auditors often encounter. These issues can lead to inaccuracies, inefficiencies, compliance breaches, and financial losses. Here are some common audit issues or observations in the Procurement-to-Pay process: 1. Lack of Segregation of Duties (SoD): One of the primary concerns…...
Here are some examples you can use 1. Misclassification of Air Conditioners/other appliances as Office Equipment ACs, whether installed in Factory or in Office should be treated as Plant and Machinery with 15 Years useful life. But they are often misclassified as Office Equipment with 5 years useful life under Schedule II of Companies Act…....
1. Financial Performance: This involves assessing the company’s financial statements, including the balance sheet, income statement, and cash flow statement, to understand the company’s profitability, liquidity, and financial health. 2. Business Operations: The annual report provides insights into the company’s core business operations, including its products or services, market presence, and competitive position. It may…...
Estimating the Net Realizable Value (NRV) involves assessing the expected selling price of an item less any estimated costs necessary to make the sale. When a competitor is selling the same product at a lower price, it does not directly affect NRV. However, if there is a significant difference, it may be an indication that…...
In situations where it is not possible to attend physical verification of cash, such as during the COVID-19 pandemic or other circumstances, auditors can employ alternative procedures to verify the existence and accuracy of cash balances. To verify cash: 1. Ask for the cash to be deposited in a bank and withdrawn 2. Do a…...
Bank confirmation, also known as a bank confirmation letter or bank confirmation request, is a formal inquiry sent by the auditor to the company’s financial institution(s) to obtain independent verification of the client’s bank balances, loans, and other related information. The bank confirmation serves as an important audit procedure to confirm the accuracy and completeness…...
As a statutory auditor, one of the most critical balances to verify is the cash balance. Cash is a highly liquid asset and is susceptible to misappropriation or misstatement, making it essential to ensure its accuracy. To verify the cash balance, an auditor may adopt the following procedures: 1. Bank Reconciliation: The auditor performs a…...
When performing an audit of accounts payable, ensuring the completeness assertion is crucial. Here are some procedures an auditor may adopt to check completeness: 1. Review of Purchase Requisitions and Orders: The auditor can examine the company’s purchase requisitions and purchase orders to verify that all authorized purchases have been properly recorded. This helps ensure…...
When testing the warranty in revenue, the auditor may adopt the following procedures to ensure its accuracy and completeness: 1. Review of Warranty Policies: The auditor should understand the company’s warranty policies and procedures. This includes reviewing the terms and conditions of warranties, the length of the warranty period, and any specific criteria or limitations…....
When dealing with bank accounts that have no balance or very minimum balance, the auditor may adopt the following procedures to verify them: 1. Inquiry and Documentation Review: The auditor can inquire with the management about the purpose and nature of these bank accounts. Additionally, they can review the account opening documents, bank statements, and…...
When dealing with a company that has a large number of bank accounts and a significant balance, it may not be practical or efficient to verify each individual bank account during the audit process. In such cases, auditors often employ sampling techniques to select a representative sample of bank accounts for detailed verification. The decision…...
Apart from balance confirmation, there are several procedures an auditor can adopt for the audit of cash and bank balances. These procedures aim to provide sufficient and appropriate audit evidence regarding the existence, ownership, completeness, and valuation of cash and bank balances. Some of these procedures include: 1. Bank Reconciliation: Obtain and review bank reconciliations…...
As an auditor, if two government companies comprising approximately 30% of trade receivables are not responding to the management, it is a matter of concern that requires appropriate action. The following steps can be taken in response to this situation: 1. Communication: Engage in direct communication with the management of the audited company to express…...
As the Statutory Auditor of the company, verifying a debtors balance of Rs 2 crore with more than 200 customers requires a systematic approach to ensure accuracy and completeness. The following steps can be taken: 1. Planning: Develop an audit plan specifically tailored to address the large number of customers and the significant debtors balance…....
When encountering a mismatch in balance confirmation while auditing trade receivables, the following steps can be taken to resolve the discrepancy: 1. Review Documentation: Carefully review the correspondence between the audited entity and its customers regarding the balance confirmation requests and responses. Examine the terms, dates, and any relevant supporting documentation, such as invoices, contracts,…...
The valuation of raw materials under the relevant Indian Accounting Standards (Ind AS) follows the principle of “lower of cost and net realizable value” (LCNRV). This principle is similar to the “lower of cost or market” (LCM) principle under the previous Indian Generally Accepted Accounting Principles (GAAP). According to Ind AS 2, Inventories, raw materials…...
Deferred Tax Assets (DTAs) are recognized under both the previous Indian Accounting Standards (AS) and the current Indian Accounting Standards (Ind AS), but there are some differences in the criteria for their recognition. Under AS, DTAs were recognized only to the extent that there was virtual certainty of sufficient future taxable income against which the…...
In the context of financial reporting and accounting, “virtual certainty” and “reasonable certainty” are terms used to describe the level of confidence or likelihood associated with the recognition and measurement of certain events or amounts. While they both imply a high degree of confidence, there is a subtle difference between the two: 1. Virtual Certainty:…...
Performance materiality is the level of materiality set for specific accounts or classes of transactions during an audit. It is determined by the auditor based on their professional judgment and considers the overall financial statements’ materiality level. When setting performance materiality, auditors consider several factors: 1. Overall materiality: The materiality level for the financial statements…...
In the context of auditing, walkthroughs and control testing are two important procedures used to assess the effectiveness of a company’s internal controls. Walkthroughs: A walkthrough is a step-by-step review of a process or system to gain an understanding of its design and operation. It involves following a transaction from its initiation to its final…...
MRL stands for Management Representation Letter. It is a letter obtained by the auditor from the management of the audited entity. The purpose of the MRL is to document management’s acknowledgement of its responsibility for the financial statements and to confirm various representations made to the auditor during the audit process. The MRL is used…...
If faced with a situation where debtors’ confirmations are not received during an audit, the following steps can be taken: 1. Alternative Audit Procedures: In the absence of debtor confirmations, the auditor can employ alternative audit procedures to obtain sufficient and appropriate audit evidence. This may involve performing analytical procedures, such as comparing the debtor…...
OD (Overdraft) and CC (Cash Credit) are two common types of borrowing facilities provided by banks, but they differ in their nature and usage: Nature: Overdraft (OD): An overdraft is a facility that allows an individual or business to withdraw funds from their bank account even if the account balance is zero or negative. It…...
CIBIL (Credit Information Bureau India Limited) and CRISIL (Credit Rating Information Services of India Limited) are both important entities in the financial industry, but they serve different purposes and have distinct roles: CIBIL is a credit information company that collects and maintains credit-related data of individuals and companies. It operates as a credit bureau and…...
DSCR stands for Debt Service Coverage Ratio. It is a financial metric used by lenders to assess a borrower’s ability to meet their debt obligations, specifically interest and principal payments. The DSCR measures the cash flow available to cover debt payments, providing an indication of the borrower’s capacity to service their debt. The calculation of…...
One important yardstick in the assessment of a term loan is the Debt Service Coverage Ratio (DSCR). DSCR is a financial metric used by lenders to evaluate a borrower’s ability to generate sufficient cash flow to meet their debt obligations. It provides an indication of the borrower’s capacity to repay the loan. DSCR is calculated…...
IRAC (Income Recognition, Asset Classification, and Provisioning) norms are guidelines issued by the Reserve Bank of India (RBI) to ensure prudent and transparent recognition of income, classification of assets, and provisioning for potential loan losses by banks and financial institutions. These norms play a crucial role in maintaining the stability and integrity of the banking…...
Debtor days and inventory days are calculated to assess the efficiency and effectiveness of a company’s working capital management. These ratios provide valuable insights into the company’s liquidity, cash flow, and operational efficiency. Debtor days, also known as accounts receivable days or average collection period, measures the average number of days it takes for a…...
SFT stands for Specified Financial Transaction, and it is a term used in the context of tax reporting in India. The concept of SFT was introduced to enhance transparency and curb tax evasion by capturing certain high-value transactions. These transactions are required to be reported by the parties involved to the Income Tax Department. SFT…...
When analyzing the annual report of a company, several key areas should be considered to gain insights into the company’s financial performance, strategies, and overall health. Here is a structured approach to analyzing an annual report: 1. Financial Statements: Review the balance sheet, income statement, and cash flow statement to assess the company’s financial position,…...
When assessing the creditworthiness of a company, several key ratios are commonly considered to evaluate its financial health and ability to repay its obligations. Here are some important ratios to consider when giving credit: 1. Current Ratio: This ratio indicates a company’s ability to cover its short-term obligations with its short-term assets. A higher current…...
Bottom-up budgeting and top-down budgeting are two different approaches to the budgeting process within an organization. Here’s a brief explanation of each: Bottom-up Budgeting: In bottom-up budgeting, the budget is created by involving various departments or teams within the organization. Each department or team prepares its own budget based on its specific needs, objectives, and…...
Ensuring the completeness and accuracy of financial statements is crucial to maintain the integrity of financial reporting. Here are some key measures that can be taken to achieve this: 1. Robust Internal Controls: Implementing strong internal controls is essential to ensure the completeness and accuracy of financial statements. This includes segregation of duties, proper authorization…...
Financial statements are key financial documents that provide an overview of a company’s financial performance and position. The main components of financial statements include: 1. Income Statement: Also known as the statement of operations or statement of comprehensive income, the income statement shows the company’s revenues, expenses, gains, and losses over a specific period. It…...
FP&A stands for Financial Planning and Analysis. It is a function within an organization that focuses on financial planning, budgeting, forecasting, and financial analysis. The main purpose of FP&A is to support strategic decision-making by providing accurate and timely financial information and insights to management. In FP&A, professionals work closely with various departments, such as…...
Goodwill impairment occurs when the value of a company’s goodwill asset on the balance sheet is determined to be lower than its recorded amount. The impairment is recognized when there is a significant decline in the company’s business or when the fair value of the reporting unit carrying the goodwill falls below its carrying value…....
Accounts receivable and deferred revenue are both important financial concepts related to revenue recognition, but they represent different aspects of a company’s financial transactions: Accounts Receivable: Accounts receivable (AR) represents the money owed to a company by its customers for goods or services that have been delivered but not yet paid for. It arises when…...
The scenario you presented, where a company has had positive EBITDA for the past 10 years but recently went bankrupt, may seem contradictory at first. However, it is important to understand that EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is just one measure of a company’s financial performance and does not capture the full…...
Performing due diligence on audited financials is essential to gain a deeper understanding of a company’s financial health and identify any potential risks or inaccuracies. Here are the key reasons why due diligence is conducted on audited financials: 1. Verification of Financial Information: Audited financial statements are prepared by independent auditors who examine and verify…...
Free cash flows of a firm refer to the cash generated by its operations that is available for distribution to investors, debt repayment, or reinvestment in the business. It represents the cash flow that remains after deducting operating expenses, taxes, and capital expenditures necessary to maintain and expand the company’s operations. Here are some key…...
Valuing a company involves assessing its worth or intrinsic value, which can be determined using various methods. Here are some common approaches to company valuation: 1. Comparable Company Analysis: This method involves comparing the company to similar publicly traded companies or recent transactions in the same industry. Key financial ratios, such as price-to-earnings (P/E), price-to-sales…...
The income statement is not directly affected by changes in inventory because it follows the matching principle of accounting. The matching principle states that expenses should be recognized in the same period as the revenues they help generate. As a result, the income statement primarily focuses on the recognition of revenues and expenses incurred during…...
Working capital refers to the difference between a company’s current assets and its current liabilities. It represents the funds available to cover day-to-day operations and is a key indicator of a company’s liquidity and short-term financial health. Working capital is essential for meeting short-term obligations, managing inventory, funding operational expenses, and sustaining ongoing business activities…....
The time it takes to collect accounts receivable can vary depending on various factors such as industry practices, company policies, customer payment terms, and the efficiency of the company’s credit and collection processes. In general, the collection period for accounts receivable is measured in days and is commonly referred to as the “Days Sales Outstanding”…...
LIFO (Last-In, First-Out) and FIFO (First-In, First-Out) are two commonly used inventory valuation methods. They differ in how they assign costs to inventory and calculate the cost of goods sold (COGS): LIFO: Under the LIFO method, it is assumed that the most recently purchased or produced inventory is sold first, and the cost of goods…...
Usually, the shareholders of the target prefer getting Cash rather than equity. The acquirer prefers issuing shares. The acquire should issue shares in case the purchase consideration is same in all cases – this is the least risky option. However if there is excess cash and no investment opportunity, cash may be used The method…...
In general, a technology company would likely have a higher beta compared to a manufacturing company. Beta is a measure of a stock’s volatility or sensitivity to market movements. A beta greater than 1 indicates higher volatility, while a beta less than 1 suggests lower volatility compared to the overall market. Technology companies are often…...
The Finance Act 2020 had increased the tax audit limit for a person carrying on business from ā¹1 crore to ā¹5 crore, subject to a condition that cash receipts and cash payments during the year do not exceed 5 per cent of the total receipts/payments. The Finance Act 2021 further increased this limit to ā¹10…...
Savings accounts Family wealth accounts Home loans Car loans Foreign exchange services De-mat account Favorite… To get access, please buy CA Interview Question Bank...
Foreign Exchange Reserves are cash and other reserve assets such as gold held by a central bank or other monetary authority that are primarily available to balance payments of the country, influence the foreign exchange rate of its currency, and to maintain confidence in financial markets. Reserves are held in one or more reserve currencies,…...
In general, the treatment of excise duty paid in deferred tax follows the principles of temporary differences between the carrying amount of an asset or liability for accounting purposes and its tax base. If there is a temporary difference that results in taxable or deductible amounts in future periods related to the excise duty paid,…...
The treatment of land in deferred tax depends on the accounting policies followed by the company and the applicable tax laws in the jurisdiction. Generally, land is considered a non-depreciable asset, and its value does not change over time for accounting purposes. However, for tax purposes, land may be subject to certain tax rules and…...
The Comparable Uncontrolled Price (CUP) method is a transfer pricing technique used to determine the arm’s length price for transactions between related entities. It involves comparing the price of a controlled transaction with the price of a similar transaction between unrelated parties (uncontrolled transaction). The goal is to ensure that the pricing of intercompany transactions…...
To check whether a purchase is real or inflated, you can perform the following procedures during an audit: Review purchase orders: Examine the purchase orders for accuracy, completeness, and proper authorization. Ensure that they include detailed descriptions of the goods or services being purchased, quantities, prices, and delivery terms. Verify supplier existence and credibility: Confirm…...
Internal control refers to the system of policies, procedures, practices, and structures established within an organization to safeguard its assets, ensure accuracy and reliability of financial reporting, promote operational efficiency, and comply with laws and regulations. The primary goal of internal control is to minimize risks and provide reasonable assurance that the organization’s objectives are…...
Financial instruments are contracts that give rise to a financial asset in one entity and a financial liability or equity instrument in another entity. They encompass a broad range of financial assets and liabilities, such as cash, trade receivables, loans, bonds, derivatives, and equity instruments. These instruments represent a key aspect of an entity’s financial…...
Major audit areas, also termed audit components or cycles, encompass distinct sections of an organization’s financial statements and operations, focal points for auditors during audits. These areas facilitate methodical assessment of financial statements to ensure precision, adherence to accounting standards, and robust internal controls. Key audit areas encompass: Cash and Cash Equivalents: Validation of cash…...
CIF (Cost, Insurance, and Freight) and FOB (Free On Board) are terms used in international trade to define the responsibilities and costs associated with the shipment and delivery of goods between buyers and sellers. These terms indicate who is responsible for various expenses, risks, and when ownership of the goods transfers from the seller to…...
As per Indian Accounting Standard (Ind AS) 12, a deferred tax liability documented on a company’s balance sheet signifies an impending tax payment obligation in the future. This liability is computed by multiplying the company’s expected tax rate by the variance between its taxable income and accounting profit before taxes. The deferred tax liability accounts…...
A Deferred Tax Liability is an entry on a company’s balance sheet, in accordance with Indian Accounting Standard (Ind AS) 12, signifying taxes that are payable in the future due to timing differences between their accrual and actual payment. The deferral arises from the contrasting timing of tax recognition and payment. Notably, a common instance…...
The operating cycle, also known as the cash conversion cycle, is a vital financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flow from sales. It reflects the efficiency of a company’s working capital management and provides insights into how quickly a…...
Goodwill is only charged to the profit and loss (P&L) statement when there is an indication that its carrying value may be impaired, i.e., when the value of goodwill has decreased due to a loss in its revenue-generating capacity or some other adverse effect. If a company’s revenue-generating potential remains intact and there is no…...
The ratio of Total Outside Liabilities (TOL) to Tangible Net Worth (TNW) is a financial metric used to assess a company’s financial leverage and risk. It provides insights into the proportion of a company’s total liabilities that are financed by its tangible net worth, which represents the net value of its tangible assets after deducting…...
Gross Domestic Product (GDP) rate is a key economic indicator that measures the overall size and growth of a country’s economy over a specific period. It represents the total value of all goods and services produced within a country’s borders during a given time, typically measured on an annual basis. The GDP rate provides valuable…...
The discount rate, often referred to as the required rate of return or cost of capital, is a crucial concept in finance used to determine the present value of future cash flows. It represents the rate of return an investor or company requires to justify investing in a particular project or asset, considering the inherent…...
Section 194Q: Section 194Q was introduced by the Finance Act, 2021, and it applies to certain buyers who purchase goods from a resident seller. The key points are: Applicability: This section applies if the buyer’s turnover or gross receipts in the preceding financial year exceed Rs. 10 crores. Transaction Type: It is applicable to the…...
To record the construction, demolition, and relocation of the tower, the following steps should be taken: Record the initial construction of the tower: Debit the Property, Plant, and Equipment (PPE) account for the cost of construction, which is 5 lakhs. Credit the Cash/Bank account for the same amount. Record the depreciation of the tower: Debit…...
Solvency ratios are financial metrics that provide insights into a company’s ability to meet its long-term financial obligations and remain financially stable over time. These ratios focus on the company’s debt levels in relation to its assets, equity, and earnings. Here are some key solvency ratios that help assess financial stability: Debt-to-Equity Ratio: This ratio…...
Section 115BAA: Section 115BAA of the Income Tax Act pertains to the concessional tax regime for domestic companies. It allows domestic companies the option to pay income tax at a reduced rate of 22% (plus applicable surcharge and cess) if they do not claim certain deductions and exemptions. The reduced rate is applicable for companies…...
Under Indian Accounting Standards (Ind AS), cash discounts are generally considered a reduction of the purchase cost of inventory and are deducted from the cost of the inventory rather than added to it. Reference: Ind AS 2, “Inventories” Paragraph 11 of Ind AS 2 states that the cost of inventory should include all costs of…...
