Verification and Valuation of Assets and Liabilities


Verification is concerned with:

1.The existence of Actual items of assets and Liabilities.

2.Ownership and possession of the assets

3.Proper Classification and Valuation of both Assets and Liabilities.

According to Spicer & Peglar,” Verification of Assets implies an enquiry into the value, ownership and title, existence and possession and the presence of any charge on the assets”

So Verification of Assets may be said to form an opinion in respect of the following:

1.Existence of the Assets

2.Ownership of Assets

3.Possession of the Assets, whether actual or constructive

4.Proper valuation of the  Assets

5.Proper presentation

Verification of Liabilities:

1.Balances in Creditors,

2.All liabilities have been disclosed.

3.All liabilities are properly valued.

4.Proper classification of Liabilities.

Valuation of Assets & Liabilities.

It is the value of which an item is stated in the balance sheet as per the GAAP.

Normally assets are valued as under.

1.Cost 2.Market Value 3.Cost of replacement 4.Realizable Value 5.Book Value 6.Break Up or Scrap Value 7.Going Concern Value.

Methods of Stock taking:

1.Unit Cost 2.Average Cost 3.FIFO 4.LIFO 5.Base Stock 6.Adjusted Price 7.Standard Cost 8.HIFO

Difference between Vouching & Verification:

Valuation of Assets & Liabilities.

It is the value of which an item is stated in the balance sheet as per the GAAP.

Normally assets are valued as under.

1.Cost
2.Market Value
3.Cost of replacement
4.Realizable Value
5.Book Value
6.Break Up or Scrap Value
7.Going Concern Value.

Methods of Stock taking:

1.Unit Cost
2.Average Cost
3.FIFO
4.LIFO
5.Base Stock
6.Adjusted Price
7.Standard Cost
8.HIFO
  Difference between Vouching & Verification:
1. Nature of work Vouching It examines the entries relating to transactions
Verification It examines the assets & liabilities in the balance sheet
2. Time Vouching It is done throughout the year
Verification It is done at the end of the year
3. Basis Vouching It is based on documentary examination
Verification It includes personal as well as documentary examination
4. Valuation Vouching Vouching does not include valuation
Verification It includes valuation

Difference between Vouching & Verification & Valuation:

1. Meaning

Vouching

It consists of comparing entries in the books of accounts

 

Verification

It proves the existence, ownership & title

 

Valuation

It certifies the correct value of Asset & Liability

2. Subject matter

Vouching

In this entries are recorded in the original books and their posting

 

Verification

Its verifies assets & liabilities

 

Valuation

-do-

3. By whom

Vouching

It is done by senior Auditors & audit clerks

 

Verification

It is done by Auditor

 

Valuation

-do-

4. When

Vouching

After the entry of the transaction

 

Verification

End of the financial year

 

Valuation

End of the financial year

5. Evidence

Vouching

Vouchers

 

Verification

Title deeds, receipts & payments

 

Valuation

Certificate from owners/directors

3 thoughts on “Verification and Valuation of Assets and Liabilities

  1. THIS IS VERY HELPFULL FOR THE PURPOSE OF STUDENTS FOR EXAMINATION PREPARATION …………..

  2. Thanks for giving the clear answers this is very useful for the students to know about…. these differentiation is very much clear

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