Realised profits and the cash test
Article Abstract:
Compliance with the Company Act 1980 requirement that only realized profits be recognized in the profit and loss statement is made difficult by the lack of a clear definition of the term 'realized profits.' The legislation relied on generally accepted accounting principles to provide this definition. SSAP 2, 'Disclosure of Accounting Policies,' tries to solve this problem by describing a test for determining realized profit. However, it provides little help because the wording of the statement explains the meaning of prudence and rather than realization. Even the best authority on realized profits, TR 481, fails to provide a comprehensive discussion of the cash realization test. The truth is that there is no generally accepted view of the cash test.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1995
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Risk and the role of the APC
Article Abstract:
The Auditing Practices Committee formulates, issues, and monitors auditing standards and guidelines and is currently playing a role in the transition of accounting firms to a risk-based auditing approach. The search for cost-effective auditing methods has been the genesis of the audit-risk model. The model incorporates cost pressure/tactical responses based on three benchmarks: stasis; RPI matched; and input cost increase match. The model details possible tactical responses that can be used by auditors to counteract cost pressures, including: using the same sample for several purposes; using computer assisted audit techniques to minimize repetition; and decentralizing operations.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1989
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Cash flow statements: the transatlantic effect
Article Abstract:
US companies' change from accruals-based accounting to cash flow may prompt UK companies to make the change as well. The US Financial Accounting Standards Board now requires companies to present cash flows as part of their financial statements. Companies can use either the gross method or the net method for reporting the cash flow. Cash receipts and payments are divided into cash flows for investing, operating, and financing. The standard also addresses foreign exchange issues, cash and cash equivalents, and the form of the statement.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1988
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