STATEMENTS OF AUDITING STANDARDS Definition

STATEMENTS OF AUDITING STANDARDS (SAS) provide guidance to external auditors on Generally Accepted Auditing Standards (GAAS) in regards to auditing an entity and issuing a report.

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SALES ALLOWANCE is an offer of a lower price as an inducement to the buyer to accept delivery under special circumstances, e.g. when the merchandise delivered is not exactly what was ordered.

ABNORMAL SPOILAGE is spoilage that is not part of everyday operations. It occurs for reasons such as the following: out-of-control manufacturing processes, unusual machine breakdowns, and unexpected electrical outages that result in a number of spoiled units. Some abnormal spoilage is considered avoidable; that is, if managers monitor processes and maintain machinery appropriately, little spoilage will occur. To highlight these types of problems so that they can be monitored, abnormal spoilage is recorded in a Loss from Abnormal Spoilage Account in the general ledger and is not included in the job costing inventory accounts (work in process, finished goods, and cost of goods sold).

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