Written on Oct, 23, 2016 by in

When two or more person jointly start a business, the business firm shall be called as partnership firm and persons who have started the business shall be called as partners of the business firm. As per Indian Partnership Act, 1932 the definition of the partnership firm is as given below:- “Partnership is the relation between persons who have agreed to …

Written on Oct, 23, 2016 by in

It is known as sole proprietorship or sole trader also. Under this system only one natural person owns the firm. He/she only takes the decisions relating to all matters relating to the business. Basically, there is no difference between the owner and business firm. The owner controls all the activities of the firm and he is personally liable for all …

Written on Oct, 22, 2016 by in

When business of a firm grows, it opens the branches to increase the sale and to cover more territory. There are various types of branches like dependent branch which is totally dependent on head office and other one is independent branch which is independent to make any deal in respect of business but as per the guidelines given by the …

Written on Oct, 22, 2016 by in

Cost audit may be defined as the verification of the correctness of cost accounts and a check on the adherence to the cost accounting plan. It is the audit process for verification of the cost of manufacture or production of any article on the basis of accounts relating to utilization of material, labor and other items of costs as maintained …

Written on Oct, 22, 2016 by in

Usually every auditor maintains an audit book. This is because it is not possible for an auditor to remember every thing relating to auditing. During audit work, an auditor may come across many difficulties which he notes down in an audit note book maintained for this purpose. He refers to this audit note book whenever he needs it. Accountants differ …

Written on Oct, 22, 2016 by in

Audit working papers are those papers which contain essential facts about accounts which are under audit. This term ‘working paper’ designates the file of analyses, summaries, comments and correspondence build up by the auditor during the course of the field work of an audit engagement. It is the duty of an auditor to maintain his working papers as they support …

Written on Oct, 22, 2016 by in

An auditor has to report that the balance sheet represents the true and fair state of affairs of the business. He can make such a report only if he verifies not only the assets but also the liabilities shown in the balance sheet. Hence the need for verification of liabilities is as important as the verification of assets to form …

Written on Oct, 11, 2016 by in

Divisible profits are those profits which are arrived at after deducting all the expenses including the taxes payable to the s tate by the company. It is very difficult to define the term divisible profit but some general principles are to be followed to decide the divisible profits:- The provisions of section 205 of the companies act should be complied …

Written on Oct, 11, 2016 by in

OBJECT OF VERIFICATION OF ASSETS:- To ensure that the assets were in existence on the date of the balance sheet. The assets had been acquired for the purpose of the business and under proper authority. The right of ownership of the assets vested in or belonged to the undertaking. To verify that they are free from charges or mortgage. To …

Written on Oct, 11, 2016 by in

In vouching, payments shown on cash book, an auditor should see that payment has been made wholly and exclusively for the business of the client and that it is properly authorized by the person who is competent to do so. An auditor should keep in mind the following special points while vouching payments:- PAYMENT OF WAGES:- Payment is properly authorized. …


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