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Write Off Ratio Formula Example

Offer Details: Write Off Ratio Overview. Write off ratio is the ratio that is usually used in microfinance institution or bank to measure the written-off loan in percent comparing to the company’s loan outstanding. When the loan is written off, it means the company is highly unlikely to receive back the remaining money that was lent.

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Audit Revenue Assertions Procedures

Offer Details: Cut-off. Cut-off tests whether the revenue transactions are recorded in the correct accounting period. Sale revenues may be recognized in the wrong accounting period due to the complicated process of the sale order, shipment and sale invoice or the client may intend to move accounting transactions from one year to another in order to increase

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Fixed Asset Write Off Journal Entry Example

Offer Details: Fixed asset write-off is the way the company removes the fixed asset from its accounting record due to it determines that such fixed asset is no longer useful in the business. Likewise, the journal entry for fixed asset write-off is required to make sure that the asset is completely removed from the balance sheet.

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Bad Debt Expense Journal Entry and Example

Offer Details: With the direct write-off method, the company usually record bad debt expenses in a different period of those revenues that they are related to. This method doesn’t attempt to match bad debt expense to sales revenue in the income statement. Likewise, the direct write-off method does not conform to the matching principle of accounting at all.

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Accounts Payable Journal Entry Example

Offer Details: Accounts Payable Aging. Accounts payable aging or A/P aging is the report used by the company to control and monitor its payables. The company that has many suppliers may need to use the A/P aging report to properly manage its payment to the supplier.

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Audit Inventory Assertions Procedures

Offer Details: Audit assertions for inventory; Existence: Inventory balances reported on financial statements actually exist at the reporting date. Completeness: Inventory reported on the balance sheet includes all inventory transactions that have occurred during the accounting period.

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Deferred Tax Explanation Example

Offer Details: The company usually either has deferred tax liability or deferred tax asset as the deferred tax would be net off between deferred tax liability and deferred asset. Temporary Difference. Temporary difference is the difference between the carrying value of an asset or liability in the accounting base and tax base. Taxable temporary difference:

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Interest Expense Journal Entry Example

Offer Details: Interest Expense Journal Entry Overview. Interest expense is a type of expense that accumulates with the passage of time. Likewise, the company needs to account for interest expense by making journal entry for such expense that has occurred during the period regardless of …

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Audit PPE Assertions Procedures

Offer Details: Audit PPE (Property Plant and Equipment) Overview. Property plant and equipment or PPE are usually material items on the balance sheet; hence to audit PPE, it is very important to perform proper audit procedures in order to obtain sufficient appropriate audit evidence for making a proper conclusion on PPE accounts.. In the audit of PPE, the inherent risk of PPE involves more on the existence

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Bad Debt Recovery Journal Entry Example

Offer Details: Similar to writing off accounts receivable, the recovery of bad debt affects only the balance sheet accounts; nothing changes to the income statement.As in the example, the net effect of the two journal entries above is increasing USD 800 of cash with the debit and increasing USD 800 of allowance for doubtful accounts with the credit.

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Inventory write off journal entry Example

Offer Details: Inventory write off journal entry Overview. The company may write off some items in the inventory when it deems that they are no longer have value in the market or the business. In this case, the company needs to make the inventory write-off journal entry in order to remove the written-off …

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Risk of Material Misstatement for Cash

Offer Details: Trainable of Fraud; Incentive: This is the case when the staff of the company thinks they should be incentivized. This is usually related to fraud committed by the person who thinks they are being paid too low which is not enough for their hard work or they are having a personal problem.

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Prepaid Insurance Journal Entry Example

Offer Details: Prepaid insurance and cash are both balance sheet items. Hence, prepaid insurance journal entry does not affect the total assets because it increases one asset account and decreases another asset account at the same amount.

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Write Off Accounts Receivable Journal Entry Examples

Offer Details: A write-off is an action of the elimination of a particular customer’s account balance due to the uncollectibility of receivables. When the company writes off accounts receivable, such accounts will need to be removed from the balance sheet.

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Joint Cost Example Allocation

Offer Details: Joint cost is the cost that incurs during the production of multiple products at the same time. The production requires similar raw material, but result in multiple products type which calls joint products. We will not be able to separate the joint cost until the split-off point.

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Temporary Difference Explanation Types Examples

Offer Details: However, this difference will be net off or settled in the future period. In other words, the value of an asset or liability in the accounting base and tax base will be the same if we total their value in all periods. So, the difference is the timing of recognition; hence, the word “temporary”.

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Notes Payable Journal Entry Example

Offer Details: Notes Payable Journal Entry Overview. Notes payable is a promissory note that represents the loan the company borrows from the bank or creditor. Likewise, the legal obligation is born the moment the company signs the notes payable agreement and receives the loan.

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Test of Controls Purposes Types vs Test of Details

Offer Details: Cut-off. We test cut-off assertion to ensure that sale transactions have been recorded in the correct accounting period. In this case, we can perform test of controls to ensure cut-off by: Trace date of shipping document to the date of sale invoice and sale transaction. Check and review FOB terms to ensure they are properly applied.

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Bad Debt Expense and Allowance for Doubtful Account

Offer Details: Direct write off Journal. For example, Company ABC has found that one of the customers declared bankruptcy last month. This customer still owes ABC 2 invoices ( $ 5,000), so accountants have prepared to write off the whole amount. The journal entries for direct write off should be:

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Fixed Asset Sale Journal Entry Gain or Loss Example

Offer Details: Fixed Asset Sale Journal Entry Overview. In business, the company may decide to dispose of the fixed asset before the end of its estimated life when the fixed asset is no longer useful due to it has physically deteriorated or become obsolete.

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Accrued Salaries Journal Entry Exmple

Offer Details: The company makes this journal entry of salaries paid to eliminate the liabilities that it has recorded in the period-end adjusting entry. Likewise, there is no effect on the income statement in this journal entry as the company has already recorded the expense that has incurred together with the accrued salary in the previous period adjusting entry.

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Calculate Bad Debt Expense Methods Examples

Offer Details: Under the direct write-off method, the company calculates bad debt expense by determining a particular account to be uncollectible and directly write off such account. Unlike the allowance method, there is no estimation involved here as the company specifically choose which accounts receivable to write off and record bad debt expense immediately.

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Bank Service Charge Journal Entry Example

Offer Details: In this journal entry, the bank service charge is an expense account in the income statement. Likewise, this journal entry increases the expense in the income statement and decrease the cash in …

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Accounting for Bonds Premium Discount Example

Offer Details: The unamortized amount will be net off with bonds payable to present in the balance sheet. Bonds Issue at a Discounted Example. On 01 Jan 202X, Company B issue 6%, bond with a par value of $ 100,000. The bond will be mature in 3 years and market rate is 8%. When the coupon rate is less than the effective interest rate, company B must discount

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Determine Materiality in Audit

Offer Details: For example, auditors have determined the similar level of overall materiality of client A and client B due to their similarity in several factors such as level of revenues, assets, profit, size, industry, etc.. However, in the audit planning, auditors have found that client A has a strong internal control while client B has a weak internal control.In this case, auditors have assessed the risk

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Discounted on Note Receivable Formula Example

Offer Details: It should be amortized over the lifetime of a note receivable and net off with interest revenue. Note Receivable is the balance sheet items which fall under current asset with a maturity date less than a year. It is the promissory note to receive the money in the future which includes both principal and interest. The holder will recognize

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Gain or Loss on Extinguishment of Debt Formula

Offer Details: Gain or loss on extinguishment of debt is the difference between fair value and the carrying amount of debt on the date it paid off. Debt extinguishment happens when the debt issuer recalls the securities before the maturity date. This occurs due to various situations such as interest rate change, the issuer has cash surplus, and so on.

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Accrued Vacation Journal Entry Example

Offer Details: In this journal entry, the expense increases (debit) to record the cost that incurs as the employees have worked for the period. On the other hand, the liability also increases (credit) to recognize the payment obligation that the company needs to fulfill at the end of the period.

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Deviation from internal control Example Auditor Concern

Offer Details: Deviation from Internal Control. Deviation from internal control is the situation when company already designs internal control but they cannot manage one type of transaction which outside the normal business operation. We consider it a non-occurrence transaction or “One-off” as it is not highly likely to happen again in the future.

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Direct Cost and Indirect Cost Different Analysis

Offer Details: Direct Vs Indirect cost in manufacturing. In manufacturing, direct cost is the raw material that can be tracked to the finished goods. They can be physically identified, and …

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Cost to Income Ratio Formula Example

Offer Details: Cost to Income Ratio Overview. Cost to income ratio is the measurement that is used in the company in order to evaluate its efficiency. It is usually used in the microfinance institution or bank in order to measure its operating cost compared to the income it generates.

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Audit Accounts Payable Assertions Risks Procedures

Offer Details: Audit assertions for accounts payable; Completeness: Accounts payable balances reported on the balance sheet include all payable transactions that have occurred during the accounting period.

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Internal Control Definition Objectives

Offer Details: Internal control is the policy and procedures that the company set in place in order to have an efficient and effective business operation

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Move from Cash Basis to Accrual Basis

Offer Details: During the change, we need to determine the fixed asset listing which still have value on the cut off date. We will start with. Inventory. Inventory is classified as current asset and it will be recorded as cost of goods sold when they are sold to the customer.

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Search for Unrecorded Liabilities Explain Examples

Offer Details: Search for Unrecorded Liabilities Overview. Search for unrecorded liabilities is the audit test that auditors perform to verify if the payables are understated due to the liabilities have not been recorded.

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Assets Management Ratio Important Type of Ratio

Offer Details: Days sale in inventory is the number of days which company spends to sell off all inventory. In other words, it is how long the stock will be last. Days Sale in Inventory = Ending Inventory / COGS * 365. The shorter the company take to sell off the stock, it will be better as they can make more revenue.

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Credit Note vs Debit Note Different Journal Entries

Offer Details: Note: we ignore the double entries of inventory and COGS as it is related to write off due to quality issues. Here are the journal entries for Company XYZ (Customer) on 01 Jan 202X. Account Debit Credit; Inventory_Raw Material: $ 50,000: Accounts Payable: $ 50,000: Journal entries for Company XYZ (Customer) on 08 Jan 202X. Account

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