Question

What do you mean by verification of assets and liabilities?

Answer 1

The verification of assets and liabilities involves the consideration of the following points:

1. That each asset/liability is correctly stated in the balance sheet.

2. That each asset/liability is correctly valued according to the generally accepted valuation prin­ciples.

3. That the assets actually exist on the date of balance sheet, and are the property of the company.

4. That the assets are free from any charge ex­cept that disclosed on the balance sheet.

5. That no liabilities on the date of balance sheet have been omitted.

The verification of assets and liabilities achieves two main objects:

1. Propriety of transactions recorded.

2. Expressing an opinion on the financial state­ments, i.e., whether the balance sheet reflects a true and fair view of the state of affairs of the company.

I hope this helps.