Investment appraisal methods are techniques used to evaluate investment proposals and assist companies in determining their desirability based on their income-generating potential. These methods also help rank proposals in order of preference. A sound appraisal method should enable the company to measure the real worth of a proposal and make informed accept-or-reject decisions. Investment appraisal…
(This post explains what are NPV, IRR, DCF, Time value of money, Hurdle rate or opportunity cost of capital, accounting rate of return, pay- back period etc.) The price of groceries or any other items purchased by you today will not be same next year. The purchasing ability of a Rupee today is different (normally…
Prudential norms: The objective of prudential regulation is to protect the stability of the financial system and protect deposits so its main focus is on the safety and soundness of the banking system and on nonbanking financial companies (NBFCs) that take deposits from the public. Provisioning for bad debts under the Health Code-based system for…
DefinitionTreasury stock refers to shares that were previously issued by a company and subsequently repurchased from the open market. These shares are held by the company itself and are not considered part of the outstanding shares. As such, treasury shares do not confer voting rights, nor are they eligible for dividend payments. Key Aspects of…
A compliance audit is a structured and systematic evaluation designed to assess whether an organization adheres to applicable laws, regulations, internal policies, and relevant industry standards. It serves as a vital governance tool to verify conformity, promote accountability, and reinforce ethical and regulatory integrity within the organization. Through such audits, organizations can identify areas of…
Accounting standards are formal policy documents issued by expert accounting bodies, governments, or other regulatory authorities. These standards provide guidance on the recognition, measurement, presentation, and disclosure of accounting transactions in financial statements. Accounting standards address the following key areas:(a) Recognition – Identifying which events and transactions should be recorded in the financial statements,(b) Measurement…
Standard costing methods classify standards based on their accuracy and intended application. These include ideal, basic, normal, current, and expected standards, each serving a specific role in cost control and performance evaluation. (i) Ideal Standards Ideal standards represent the level of performance achievable under the most favorable conditions. These conditions include optimal material and labor…
A balance sheet should always balance. Assets must always equal liabilities plus owners’ equity. Liabilities must always equal assets minus owners’ equity. The balance sheet of an entity may be presented in a few different formats, including: Report form This is the most common format, with assets listed first, then liabilities, and finally equity. The…
Far away in memory, statutory auditors have been using “external confirmations” to obtain balance confirmations in respect of accounts receivables, accounts payables, bank balances, loans, investments, or inventories held by third parties, etc. from various parties, including banks. In other words, external confirmations mean audit evidence obtained as a direct written response to the auditor…
The audit is classified into many different types and levels of assurance according to the objectives, scopes, purposes, and procedures of how auditing is performed. The financial statement auditing is done normally in accordance with International Standards on Auditing (ISA) as well as other local auditing standards. An operational audit involves checking the efficiency of…
