Cash flow statements have many uses other than legal need for some companies to prepare them. Let us first of all list a few cases where a business might find them useful in helping to answer their queries:
a) One businessman wants to know why he now has an overdraft. He started off the year with money in the bank. He has made profits, and yet he now has a bank overdraft.
b) Another businessman wants to know why the bank balance has risen even though the firm is losing money.
c) The partners in a business have put in additional capital this last year. Even so, the bank balance fell dramatically during the year. They want an explanation as to how this has happened.
A study of the cash flow statement in each case would reveal to them the answers to their questions. A study of the final accounts themselves would not give them the information that they needed.
Thursday, February 10, 2011
GOVERNMENT OF ACCOUNTING IN NEPAL
Nepalese government accounting is developed on the principle of conventional cash. Some of the shortfalls of Nepalese cash accounting include the treatment of advance payments and inventories as expenditures, the omission of ‘off budget’ transactions, and the lack of provision for recognizing direct payment and commodity grants offered by donors (World bank 2007). The accounting statements and reports are prepared on an annual basis without demonstrating cumulative expenditures incurred or incomes generated for more than a year, transactions made by third parties, receipts and payments on foreign currencies, and correction on errors, among others. Similarly accounting policies, assumptions and explanatory notes are yet to be included in the audited statements, as demanded by the cash basis IPSAS.
The adoption of accrual accounting has been a major government accounting reform agenda in Nepal for more than two decades. The country has been developing the prevailing cash accounting standards by referring to the cash basis IPSAS.
The adoption of accrual accounting has been a major government accounting reform agenda in Nepal for more than two decades. The country has been developing the prevailing cash accounting standards by referring to the cash basis IPSAS.
GOVERNMENT ACCOUNTING IN MALDIVES
The audit acts of Maldives allows the cash basic IPSAS to be followed, albeit this is not specified in the public finance law (World Bank, 2007). A modified version of cash accounting is in practice in the government of Maldives. The prevailing accounting system is inconsistent with the requirements of both cash and accrual IPSASs in many instances. For instance, as underscored by the cash-basis IPSAS, the financial statements lack disclosures on the impact of events occurring after reporting date, the consolidation of controlled entities, the actual cash balance available for use, the comparative cash information, the authorization date, and the accounting policies and notes. To comply with the accrual basis of IPSASs the financial statements are to be upgraded by including disclosures on assets, liabilities, net equity, revenues, and expenses by major classes, net surplus or deficits, and cash flows indicating operation, investment and financial activities among others. The Ministry of Finance and Treasury (MoFT) has prioritized the development of a code of ethics for public sector accountants and the launch of distance learning accounting education.
DOCUMENTARY CREDIT OR LETTER OF CREDIT (L/C)
Letter of credit (L/C) is a written undertaking by the importers bank (the issuing bank) on behalf of its customer ( the importer/ applicant ) promising to effect payment in favor of the exporter (beneficiary) up to a stated sum of money within a prescribed time limit and against stipulated documents. Under L/C the seller/exporter can feel assured for the payment and the buyer/importer can also feel assured for the goods he has purchased. The high degree involvement of banks in the L/C process builds in trust into the transactions has contributed to a large extent the growth of international trade in modern times.
A key principle underlying LC is that banks deals only in documents and not in goods. The decision to pay under LC will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the LC.
A key principle underlying LC is that banks deals only in documents and not in goods. The decision to pay under LC will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the LC.
COMPUTER ASSISTED AUDITING TOOLS (CAATs)
CAATs are computer programs that the auditor use as part of the audit procedures to process data of audit significance contained in a client’s information systems, without depending on him. CAAT helps auditors to perform various auditing procedures such as (a) Testing details of transactions and balances, (b) identifying inconsistencies or significant fluctuations, (c) Testing general as well as application control of computer systems. (d) Sampling programs to extract data for audit testing and (e) redoing calculations performed by accounting systems. Forensic accounting software (for accounting purposes) comes in two different varieties: data extraction software and financial analysis software. Data extraction software is designed to conduct spreadsheet analyses on all the company’s computer database records, such as billings, accounts receivables, accruals and account payables, payments to vendors, payroll and purchasing. Unusual inconsistent fluctuations of anomalies are then detected and investigated. In general financial analysis software uses monthly, quarterly or annual financial statements or it can be used at any time as per our requirement basis.
NATURE OF FORENSIC ACCOUNTANCY WORK
Forensic accounting (or at least, accounting expert witnessing) can be traced as far back as 1817 to a court decision. According to the Accountant’s Handbook on Fraud and commercial crime, forensic accounting is defined as: the application of financial skills and an investigative mentality to unresolved issues, conducted within the context of the rules of evidence. Forensic Accounting broadly is a mixture of Accounting, Finance, Law, Computerization, Ethics and Criminology, with focus on prevention and detection of financial frauds and conduct of investigation to undertake and assist in litigation support to book the wrong doers. Forensic accounting is not limited to the correctness of accounts; it encompasses accounting, investigative accounting, investigative audit and litigation support. Forensic accounting focuses on detection of financial frauds by linking the data knowledge and insight together and prevention of fraud by establishment and placing the accounting system on right track, it also creates deterrence (as it promotes fear in the mind of wrong doers that there is likelihood of their being caught and punished).
INTERNATIONAL FINANCIAL REPORTING STANDARD (IFRS)
International financial reporting standard is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. International Accounting Standard Board (IASB), which operates under the oversight of the International Accounting Standard Committee Foundation (IASCF), is an independent, private sector body that develops and approves International Financial Reporting Standards. International Financial Reporting Interpretation Committee (IFRIC) is the functionary body for the interpretation of IFRSs and IASs. IFRIC replaces the standing interpretation committee (SIC) in March 2002. Meanwhile, IASB has issued 37 international accounting standards (named as 29 IASs and 8 IFRSs).
IFRS is becoming the global standard for preparation of financial statements by business enterprises. The need of international harmonization of financial reporting standards have largely paved due to the development of international capital markets. More than 100 member countries have adopted and/or permitted use of IFRS. Mandatory use of IFRSs is likely to begin in 2014 to all member countries. The expected number of countries requiring or accepting IFRSs could grow to 150 in the next few years.
IFRS is becoming the global standard for preparation of financial statements by business enterprises. The need of international harmonization of financial reporting standards have largely paved due to the development of international capital markets. More than 100 member countries have adopted and/or permitted use of IFRS. Mandatory use of IFRSs is likely to begin in 2014 to all member countries. The expected number of countries requiring or accepting IFRSs could grow to 150 in the next few years.
BAD DEBTS:
In the modern business days most of the business transactions are either it is in cash or it may be in credit but in large scale business transactions are in credit basis. With many businesses a large proportion if not all of the sales are on a credit basis the business is therefore taking the risk that some of the customers never pay for the goods sold to them in credit. This is a normal business risk and therefore bad debts as they are called are a normal business expense and must be charged as such when calculating the profit or loss for the period.
When a debt is found to be bad the asset as shown by the debtors account is worthless and must accordingly be eliminated as an asset account. The total of the bad debts leaving the reminder to be written off as a bad debt account is later transferred to the profit and loss account.
When a debt is found to be bad the asset as shown by the debtors account is worthless and must accordingly be eliminated as an asset account. The total of the bad debts leaving the reminder to be written off as a bad debt account is later transferred to the profit and loss account.
ACCOUNTING
Accounting is something that affects people in their personal lives just as much as it affects very large business. We all use accounting ideas when we plan what we are going to do with our money. We have to plan how much of it we will spend and how much we will save. We may write down a plan, known as a Budget or we may simply keep it in our minds. In simple language accounting is therefore connected with Recording of data, Classifying and summarizing data, communicating what has been learned from the data.
It is very easy to understand the accounting if we properly understood book keeping. Bookkeeping as being concerned with the work of entering information into accounting records properly. However, accounting would probably not have meant much to the reader at that stage in his/her studies. The following is the most widely used definition “The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.
It is very easy to understand the accounting if we properly understood book keeping. Bookkeeping as being concerned with the work of entering information into accounting records properly. However, accounting would probably not have meant much to the reader at that stage in his/her studies. The following is the most widely used definition “The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information.
Sunday, February 6, 2011
education
Education is most important and it is compulsory now a days without education it is very difficult to get knowledge.Education is the eye of human beings. It gives very wide sense and difficult to define in single word.
Now a days without education it is very difficult to survive in the world.When I hear people speak about education, I am deeply troubled. There seems to be a sentiment among the general population that education is an end result, a destination which, once reached, will determine what one can accomplish in his life. A "good" education translates to a lucrative career, comfortable lifestyle, security, happiness. A lack of education or a subpar education, it stands to reason, does not lead to any of these things. Thus anyone who has not attained this "good" education is sentenced to a life of financial instability, menial work, and general dissatisfaction with his circumstances so education is everything for human beings and without it its very difficult to reach in his own goal.
When people speak of education, they are usually referring to formal schooling. The overall trend in society today is to consider one's education complete after earning a college degree, whether it be at the undergraduate, graduate, or post-graduate level but in actual its very different than people thinking and it should be in parctical knowledge.
Now a days without education it is very difficult to survive in the world.When I hear people speak about education, I am deeply troubled. There seems to be a sentiment among the general population that education is an end result, a destination which, once reached, will determine what one can accomplish in his life. A "good" education translates to a lucrative career, comfortable lifestyle, security, happiness. A lack of education or a subpar education, it stands to reason, does not lead to any of these things. Thus anyone who has not attained this "good" education is sentenced to a life of financial instability, menial work, and general dissatisfaction with his circumstances so education is everything for human beings and without it its very difficult to reach in his own goal.
When people speak of education, they are usually referring to formal schooling. The overall trend in society today is to consider one's education complete after earning a college degree, whether it be at the undergraduate, graduate, or post-graduate level but in actual its very different than people thinking and it should be in parctical knowledge.
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