NETTING can be the settling of mutual obligations at the net value of a contract as opposed to its gross dollar value; or, the reduction of transfers of funds between subsidiaries or separate companies to a net amount.
EXAMINATION, in an audit, is evaluating the preparation of prospective statements, support underlying assumptions, and presentation. The accountant reports whether, in his
or her opinion, the statements conform to AICPA guidelines and assumptions provide a reasonable basis for the responsible party's forecast. The accountant should be independent, proficient, plan the engagement, supervise assistants, and obtain sufficient evidence to provide a reasonable basis for the report.
RECOGNIZE or RECOGNITION is the recording of a revenue or expense item in a given accounting period.
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