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Can anyone shed some light on quant funds please? https://groww.in/mutual-funds/escorts-tax-plan-direct-growth
I am seeing stellar returns and extremely low expense ratios but apparently since they're quantitatively managed algorithms, they don't account for things like corona for example.
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There is a difference between auditing and accounting. Auditors get confused at times with reversing and actual entries. However the best process is 100% accrual. 100% reverse. 100% actual
The other reason is in large companies the accrual person is not the invoice processing person. So the only way to keep it accurate is to do 100% entries at each step
no, because if you pay the accrued exp in a subsequent period the debit offset the credit so ends up at 0....you just acrrue/reverse/accrue/reverse/accrue/reverse etc every month until you actually pay the expense, which will credit cash debit exp.....
at the end of the day it looks like this,
12/31/18 record accrual for 100 misc exp
debit exp 100
credit liability 100
1/1/19 reverse
debit liability 100
credit expense 100
1/17/19 actually pay the expense
debit exp 100
credit cash 100
so in january 2019 you have both a debit and a credit of 100 expense which net 0 while the expe se of 100 stays in 2018
This discussion makes me sad.
While you do reverse the expense in the subsequent period through the reversal it is 100% offset by booking the expense a second time on the AP or if it continues to be an accrual you rebook the accrual resulting in zero expense in the subsequent period
Which makes sense but wouldn't that second debit to expense mean the expense is in the period that you paid for it instead of the prior period when the service/expense occurred (reason you booked an accrual in the first place)
Never mind I just thought about it. The credited expense from Jan 1 for example will offset the debit when you eventually apply it to AP, which will zero it out and leave the original prior period expense for matching principal purpose.
Manager 1 got it. I was getting a little worried there with those first two commenters lol
Looks like someone else’s ego got stoked when called out wrong
You don’t reverse the expense.
The other side of the reversal doesn’t credit expense, it would theoretically hit cash (when you actually paid the expense)
What?? Lol
I’m so glad we’re building a better working world. And this nonsense benefits humanity how?.
So you don’t overstate expenses, leading the average financial statement user to make ill informed decisions with his/her kids college funds.
God I hate accounting