Accounting / July 9, 2018 / Justice Buckley
I recall being asked to reconcile the general ledger account Freight Payable. What I needed to do was provide documentation that the balance in Freight Payable was proper. I proceeded to look at the shipments of recent sales and then determined how much we would be obligated to pay for the freight on those sales. We then adjusted the balance in Freight Payable to my documented amount. This reconciliation was done to have the correct account balance and to provide the outside auditors with documentation which could easily be reviewed.
Probability distribution. When calculating the expected present value of an ARO, and there are only two possible outcomes, assign a 50 percent probability to each one until you have additional information that alters the initial probability distribution. Otherwise, spread the probability across the full set of possible scenarios.
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