ACTG 2010 Study Guide - Final Guide: Killowen, Bank Reconciliation, Accounts Receivable
Document Summary
The direct method of presenting the operating activities section of the statement of cash flows reports components of cash flows from operating activities as gross receipts and gross payments. The indirect method of presenting the operating activities section of the statement of cash flows adjusts profit to compute cash flows from operating activities. Internal controls prote(cid:272)t a(cid:374) e(cid:374)tity"s assets fro(cid:373) theft, loss or i(cid:374)appropriate use. A lack of adequate internal controls = users cannot rely on the accuracy of financial statements. I(cid:374) fi(cid:374)a(cid:374)(cid:272)ial state(cid:373)e(cid:374)ts address the assess(cid:373)e(cid:374)t of the e(cid:374)tity"s i(cid:374)ter(cid:374)al (cid:272)o(cid:374)trols. Segregation of duties ensure that the person in charge of handling the cash is not the same person who records the cash amount. Bank reconciliation explains differences between bank account and general ledger amount) Financial statements prepared in accordance with ifrs report receivables at their net realizable value (nrv): the estimated amount that will be collected. The direct write-off method is not accepted under accrual accounting.
