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Answer: Statutory audit is done by chartered Accountants, to verify the financial statement's fairness and
it is done annually. It ensures that, to the best knowledge of the auditors, financial statements are free
from any misrepresentations and frauds.
2. WHAT IS INTERNAL AUDIT
ANSWER: An inspection and verification of the financial records of a company or firm by a member of
its own staff to determine the accuracy and acceptability of its accounting practices.
3. WHAT IS EXTERNAL AUDIT?
ANSWER: a periodic examination of the books of account and records of an entity conducted by an
independent third party (an auditor) to ensure that they have been properly maintained, are accurate and
comply with established concepts, principles, and accounting standards, and give a true and fair view of
the financial state of the entity.
4. Explain The Difference Between Internal Audit And External Audit?
ANSWER: The internal audit is conducted to help the management. The weakness of the management is
disclosed. The external audit is conducted to help the shareholder. The rights of owners are protected. The
appointment of internal audit is made by the management. The appointment in external audit is made by
the shareholders. Internal audit is the part of internal control.
External audit is the not the part of internal control. The internal audit can suggest improvement in
internal check system. The external audit can not suggest improvement in internal check system. The
internal audit can perform his duties under the terms of appointment. The management can limit the scope
of work at any time. The external auditor can perform his work to terms of appointment and other
prescribed law. The scope is very wide. Internal audit is an employee of the company. He is not an
independent person. External auditor is not an employee of the company.
Q: What do you mean by vouching?
Answer: Vouching is the process of checking the authentication of the voucher maintain by the
management with the respective supporting document
Q: Definition of audit?
Answer: An examination and verification of a company's financial and accounting records and supporting
documents by a professional, such as a Certified Public Accountant.
Q: What are Objectives of Internal Audit?
Answer: The purpose of internal audit is to keep proper control over business activities. When there is
proper control there is maximum efficiency. The internal auditor determines the degrees of control over
work. The purpose of internal audit is to evaluate the accounting system. It is concerned with checking
proper authority for transactions like purchase, retirement and disposal of fixed assets. The vouchers can
be compared with entries in order to determine that figures are facts.
The purpose of internal audit is to help the management. Internal auditor can point out the weakness. The
internal audit can be used as a tool to correct the situation. The management functions can be performed
properly. The purpose of internal audit is to review the working of business. The working of current tear
can be reviewed in detail just to note the successful area of working. There is a need to locate the weak
points. The corrective measures can be taken for proper working.
Q: Explain the difference between internal audit and statutory audit?
Answer: An internal audit is one which is conducted by the internal auditors of the company. It is not
mandatory for the company and the company just conducts it to keep a check on the operations of the
company. On the other hand statutory audit is very important because it is by the external auditors and it
is mandatory for all kinds of companies. Statutory audit is usually conducted for various purposes like tax
regulatory requires it for taxation purposes.
Q: What is an audit process?
Answer: The word 'Audit' is a derivative of the word 'Audition' which means 'to hear'. In earlier times, the
Kings used to hear their accountants narrate the accounts verbally. However, as the complexity of the
accounting function grew, need was felt to thoroughly check the accounts for mistakes misclassification
and document the findings in a written form so that it can be used by the Management, stakeholders,
investors, Government and various other bodies. This process is known as Auditing or Audit.
Q: Functions of audit?
Answer: The function of internal audit is concerned with analysis of internal check. The internal audit can
look into the duties of each employee. All employees are provided jobs on the basis of their abilities. The
auditor can test the effectiveness of internal check. The function of internal audit is examining the
application of legal requirements.
The accounts are prepared under certain legal frame work. Verification of accuracy is a function of
internal audit. The accuracy of accounting books and records can be verified with the help auditing
techniques. The audit techniques include inspection, observation, inquiry, confirmation, computation and
review. An auditor can check the accuracy through these techniques.
Q: What is annual general meeting (AGM)?
Answer: AGM the statutory meeting of the directors and shareholders of a company or of the members of
a society, held once every financial year, at which the annual report is presented
Q: What is extraordinary general meeting (EGM)?
Answer : A meeting other than the annual general meeting between a company's shareholders, executives
and any other members. An EGM is
Companies can still hold an AGM if they choose to. As with other meetings, an AGM must be arranged if
any director asks for one with due notice, or if 5 per cent of the members request one. A company may
also still need to hold one in certain circumstances. For example, you must hold an AGM if you want to
dismiss a director or auditor before the end of their term, or if you are a public company with traded
shares.
If the company does hold an AGM:
* You must send written notice to the directors and shareholders 14 days in advance (21 days in advance
for public companies with traded shares), unless your company articles state otherwise. An AGM can be
held at shorter notice if 90 per cent of members agree (95 per cent for plcs).
* You are no longer required to circulate copies of the company's accounts before an AGM. However,
they must be sent to members before they are due to be filed with the registrar of companies.
* Directors and shareholders can vote on the appointment of directors and auditors to the company (if
required).
* Ordinary resolutions can now be passed by a simple majority and special resolutions require at least 75
per cent of those eligible to vote in favour.
* You must file at Companies House any special resolutions passed at a meeting.
usually called on short notice and deals with an urgent matter.
Q : what is Accounting ?
Answer : The information system that identifies ,records, and communicates the economic events of an
organization to interested users
Q : definition of cash basis accounting?
Answer: An accounting method in which income is recorded when cash is received, and expenses are
recorded when cash is paid out.
Q : Definition of Accrual Basis accounting ?
Answer : The most commonly used accounting method, which reports income when earned and expenses
when incurred.
Q : what is capital expenditure ?
Answer : Money spent to acquire or upgrade physical assets such as buildings and machinery. Also called
capital spending or capital expense.
Q : What is Asset ?
Answer : Assets are a companys resourcesthings the company owns. Examples of assets include cash,
accounts receivable, inventory, prepaid insurance, investments, land, buildings, equipment, and goodwill.
From the accounting equation, we see that the amount of assets must equal the combined amount of
liabilities plus owners (or stockholders) equity.
Q : what is Liabilities ?
Answer : Liabilities are a companys obligationsamounts the company owes. Examples of liabilities
include notes or loans payable, accounts payable, salaries and wages payable, interest payable, and
income taxes payable
Q : what is Owners or stockholders equity ?
Answer : Owners or stockholders equity also reports the amounts invested into the company by the
owners plus the cumulative net income of the company that has not been withdrawn or distributed to the
owners.
Q : definition of revenue?
Answer : this is the total amount of money received by the company for goods sold or services provided
during a certain time period.
Q : definition of expense ?
Answer : Payment of cash or cash-equivalent for goods or services, or a charge against available funds in
settlement of an obligation as evidenced by an invoice, receipt, voucher, or other such document.
Q :What is depreciation?
Answer :A non cash expense that reduces the value of an asset as a result of wear and tear, age, or
obsolescence. Most assets lose their value over time (in other words, they depreciate),
Q : What is income statement ?
Answer : A financial statement that presents the revenues and expenses and resulting net income or net
loss of a company for a specific period of time .
Q : what is balance sheet ?
Answer : A financial statement that summarizes a company's assets, liabilities and shareholders' equity at
a specific point in time.
Q : what is cash cow ?
Answer : any business venture , operation, or product that is a dependable source of income or profit .
Q : definition of tax ?
Answer : A fee charged ("levied") by a government on a product, income, or activity of an organization or
person .
Q : what is hardware ?
Answer : Hardware refers to a physical piece of a computer. This could be a hard drive, monitor, memory
chip, or CPU. The key idea is that the item is something you can touch. This compares to software which
is not tangible in any way. You can't pick it up or weigh it. Yet, without software, hardware is useless.
Typical examples of hardware include the computer you're using to view this page, the hard drive that has
this page stored on it, and the mouse you used to click on a link to bring you to this page.
Q: what is software ?
Answer : Software is a general term for the various kinds of programs used to operate computers and
related devices.software is not visible .
Q : What is internet ?
Answer : a vast computer network linking smaller computer networks worldwide (usually preceded by the
). The Internet includes commercial, educational, governmental, and other networks, all of which use the
same set of communications protocols.
Q: What is E-commerce?
Answer : E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the
Internet, especially the World Wide Web. In practice, this term and a newer term, e-business, are often
used interchangably. For online retail selling, the term e-tailing is sometimes used.
Q : what is E-mail?
Answer : E-mail (electronic mail) is the exchange of computer-stored messages by telecommunication.
(Some publications spell it email; we prefer the currently more established spelling of e-mail.) E-mail
messages are usually encoded in ASCII text. However, you can also send non-text files, such as graphic
images and sound files, as attachments sent in binary streams.
SOME Elaborate :
ICAB - Institute of Chartered Accountants of Bangladesh.
ICMAB - Institute of Cost and Management Accountants of Bangladesh.
CIMA - Chartered Institute of Management Accountants
ICDDRB - International Centre for Diarrhoeal Disease Research, Bangladesh
NBR - National Board of Revenue
SEC - Securities and Exchange Commission
DSE - Dhaka Stock Exchange
CSE, - Chittagong Stock Exchange
FBCCI - Federation of Bangladesh Chambers of Commerce and Industries
GAAP - Generally Accepted Accounting Principles
RAM - Random-access memory
Generally Accepted Accounting Principles (GAAP): Authoritative guidelines that define accounting
practice at a particular time.
Internal Revenue Service (IRS): A government agency that prescribes the rules and regulations that
govern the collection of tax revenues in the U.S.
Securities and Exchange Commission (SEC)S: The government body responsible for regulating the
financial reporting practices of most publicly owned corporations in connection with the buying and
selling of stocks and bonds.
Q : what is Intangible Assets ?
Answer : Intangible assets include patents, copyrights, trademarks, trade names, franchise licenses,
government licenses, goodwill, and other items that lack physical substance but provide long-term
benefits to the company. Companies account for intangible assets much as they account for depreciable
assets and natural resources. The cost of intangible assets is systematically allocated to expense during the
asset's useful life or legal life, whichever is shorter, and this life is never allowed to exceed forty years.
The process of allocating the cost of intangible assets to expense
Short notes ;
Book value -- total assets minus total liabilities. (See also net worth.) Book value also means the value of
an asset as recorded on the company's books or financial reports. Book value is often different than true
value. It may be more or less.
Break even point -- the amount of revenue from sales which exactly equals the amount of expense.
Breakeven point is often expressed as the number of units that must be sold to produce revenues exactly
equal to expenses. Sales above the breakeven point produce a profit; below produces a loss.
Deferred income -- a liability that arises when a company is paid in advance for goods or services that
will be provided later. For example, when a magazine subscription is paid in advance, the magazine
publisher is liable to provide magazines for the life of the subscription. The amount in deferred income is
reduced as the magazines are delivered is called amortization, and companies almost always use the
straight-line method to amortize intangible assets.
Return on investment (ROI)
-- a measure of the effectiveness and efficiency with which managers use the resources available to them,
expressed as a percentage. Return on equity is usually net profit after taxes divided by the shareholders'
equity. Return on invested capital is usually net profit after taxes plus interest paid on long-term debt
divided by the equity plus the long-term debt. Return on assets used is usually the operating profit divided
by the assets used to produce the profit. Typically used to evaluate divisions or subsidiaries. ROI is very
useful but can only be used to compare consistent entities -- similar companies in the same industry or the
same company over a period of time. Different companies and different industries have different ROIs.
Variable cost -- a cost that changes as sales or production change. If a business is producing nothing and
selling nothing, the variable cost should be zero. However, there will probably be fixed costs.
Working capital -- current assets minus current liabilities. In most businesses the major components of
working capital are cash, accounts receivable, and inventory minus accounts payable. As a business
grows it will have larger accounts receivable and more inventory. Thus the need for working capital will
increase.
Write-down -- the partial reduction in the value of an asset, recognizing obsolescence or other losses in
value.
Write-off -- the total reduction in the value of an asset, recognizing that it no longer has any value. Writedowns and write-offs are non-cash expenses that affect profits
Answer : Tax deducted at source is one of the modes of collecting Income-tax from the assessees. Such
collection of tax is effected at the source when income arises or accrues. Hence where any specified type
of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct
a stipulated percentage of such income by way of Income-tax and pay only the balance amount to the
recepient of such income. The tax so deducted at source by the payer, has to be deposited in the
Government treasury to the credit of Central Govt. within the specified time. The tax so deducted from
the income of the recipient is deemed to be payment of Income-tax by the recepient at the time of his
assessment. Income from several sources is subjected to tax deduction at source. Presently this concept of
T.D.S. is also used as an instrument in enlarging the tax base. Some of such income subjected to T.D.S.
are salary, interest, dividend, interest on securities, winnings from lottery, horse races, commission and
brokerage, rent, fees for professional and technical services, payments to non-residents etc.
Q : What is bank reconciliation?
Answer : Analysis and adjustment of differences between the cash balance shown on a bank statement,
and the amount shown in the account holder's records. This matching process involves making allowances
for checks issued but not yet presented, and for checks deposited but not yet cleared or credited. And, if
discrepancies persist, finding the cause and bringing the records into agreement.
Q : what is Ratio Analysis?
Answer : A tool used by individuals to conduct a quantitative analysis of information in a company's
financial statements. Ratios are calculated from current year numbers and are then compared to previous
years, other companies, the industry, or even the economy to judge the performance of the company.
Ratio analysis is predominately used by proponents of fundamental analysis.
Carriage Outward: Occurs when a business PAYS for sold goods to be delivered to it's customers
premises.
Q : What is irrecoverable debts?
Q : definition of appreciation ?
1.Answer : Increase in the value of an asset through a rise in market price, appraised value, or income
earned, as compared to an earlier period. The opposite is Depreciation.
2.Answer : Increase in the value of one currency vs another, without any change in official value
occurring. It results from growth in market demand under floating exchange rates rather than official
action such as a currency revaluation.
Q : Difference between depreciation appreciation?
Answer : Appreciation and depreciation both deal with asset value over time. Some assets, such as real
estate, bonds, and homes gain value as time goes on. These assets are said to appreciate. Other assets,
such as vehicles, manufacturing plants, and office equipment lose value over time (depreciate).
Appreciation/depreciation as a verb is the process of increasing value. For instance, a piece of real estate
might appreciate at 5% per year and a car might depreciate 10% a year. De/Appreciation do NOT have to
be linear. For instance, the moment you drive a new car off the lot, it depreciates a considerable amount
(say 10% of its value). The next year, though, the car might only depreciate 5%. How one determines the
rate of de/appreciation depends on your accounting rules. For tax reasons, many companies have to abide
by strict depreciation laws (For instance, it would be unreasonable to depreciate a factory at 90% of it's
value in one year because it would effects the company's profits and thus the taxes that company pays).
For most consumers, de/appreciation is based on the market value of the asset. Back to the car example:
the moment a new car is driven off the lot, it loses a lot of its value because it is then consider a "used"
car, so people won't pay as much for it.
Answer : A 12-month period over which a company budgets its spending. A fiscal year does not always
begin in January and end in December; it may run over any period of 12 months. The fiscal year is
referred to by the date in which it ends.
Answer : Fixed costs are expenses whose total does not change in proportion to the activity of a business,
within the relevant time period. For example, a retailer must pay rent and utility bills irrespective of sales
Variable costs by contrast change in relation to the activity of a business such as sales or production
volume. In the example of the retailer, variable costs may primarily be composed of inventory (goods
purchased for sale), and the cost of goods is therefore almost entirely variable. In manufacturing, direct
material costs are an example of a variable cost.
Along with variable costs, fixed costs make up one of the two components of total cost. In the most
simple production function, total cost is equal to fixed costs plus variable costs.
Answer : A document that specifies the regulations for a company's operations. The articles of association
define the company's purpose and lays out how tasks are to be accomplished within the organization,
including the process for appointing directors and how financial records will be handled.
Answer : An excise tax is a tax on use or consumption of certain products. Excise taxes are sometimes
included in the price of a product, such as motor fuels, cigarettes, and alcohol. Excise taxes may also be
imposed on some activities, like gambling. Excise taxes may be imposed by the federal government or by
a state.