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Normal Balances refer to whether the balance for an account in a properly-formed trial balance is usually a debt or a credit. A normal balance also reflects the accounting equation. If a trial balance for an account is reversed, such an account is called a "contra-account" (e.g. accumulated depreciation as an asset or owners drawings as equity ...
IAS 2 allows for two methods of costing, the standard technique and the retail technique. The standard technique requires that inventory be valued at the standard cost of each unit; that is, the usual cost per unit at the normal level of output and efficiency.
After the evidence is marked for identification, the proponent of the demonstrative evidence must lay a foundation. It is at this time that the relevancy of the demonstrative evidence is usually challenged. Laying of a foundation explains how the demonstrative evidence relates to the facts of the case and establishes the evidence's authenticity.
Accounts are used in the generation of a trial balance, a list of the active general ledger accounts with their respective debit and credit balances used to test the completeness of a set of accounts: if the debit and credit totals match, the indication is that the accounts are being correctly maintained. However, a balanced trial balance does ...
Methods or techniques of audit evidence gathering are classified in 7 categories: 1. Inspection This involves physical examination of supporting accounting documentation, contracts, records and board of director minutes. It also includes physical examination of the assets.
The difference between the cost of an inventory calculated under the FIFO and LIFO methods is called the LIFO reserve (in the example above, it is $750, i.e. $5250 - $4500). This reserve, a form of contra account , is essentially the amount by which an entity's taxable income has been deferred by using the LIFO method.
The evidence gathered in an observation usually applies to that date. This means an inventory observation on December 31 demonstrates the amount of inventory the company has on that date. Inquiry involves speaking to people, whether inside or outside the client's company, to learn specific information.
Generally Accepted Accounting Principles (GAAP) [a] is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC), [1] and is the default accounting standard used by companies based in the United States.