Standard Cost
Robert Standard cost means what the cost should be. Standard cost is predetermined cost of a unit of product, or an operation or a department or a process. Standard cost is…
Opportunity Cost
Opportunity cost is a concept used for evaluation of alternative uses of resources. Decision makers select that alternative use of resources from which they expect the maximum net return. Opportunity…
Fixed Cost and Variable Cost
This classification is based on cost behaviour. It is one of the most useful classifications f.r the purpose of cost planning and control. Cost behaviour means how a cost will…
Period Cost or Non manufacturig Cost
Cost which is not related to production and is matched against revenues on a time period basis is called period cost, non manufacturing cost or non-inventoriable cost. Period cost includes…
Product Cost or Manufacturing Cost
Product cost -includes costs incurred- for manufacturing or for purchasing goods. In case of manufacturing business product cost consists of direct materials, direct labour and factory overhead. In case of…
Limitations of Financial Accounting
Limitations from which financial accounting suffers may be summarized as follow: 1. Historical And Monetary Nature. Emphasis of financial accounting is on recording transactions revenues only after they have occurred, then…
Management Needs and Accounting
Original financial accounting model based on double entry system of book keeping, developed by an Italian merchant named Lucas Pacioli, is basically to fulfil managerial requirements of a trading business.…
Management accounting uses
Management accounting uses both cost and financial info to advise management in planning and controlling the organization. Management accounting is used for providing information the organization people. Management accountants design specific purpose…
What is Cost Accounting ?
Cost accounting uses information provided by financial accounting together with much more details of operations of cost accounting is collection, processing and evaluation of operating, data. e.g. cost of products, operations, processes,…
What is financial Accounting and its primary concern ?
Financial accounts provide information to inside users i.e, management of accounting entity and to outside users like shareholders, investors, bankers, government departments, trade unions and general public. The information provided…
Why we need Accounting ?
Every organization aims at making best possible use of its scarce resources, wants to know the results of its efforts and needs a measure of comparison so that deficiencies and…
List of accounting softwares
Accounting software is the need of every business now for managing their transactions sales purchases and off course maintain their inventory. We are not the seller of any sort of…
Trend Analysis / Horizontal Analysis in financial Statements
Definition and Explanation of Horizontal or Trend Analysis: Comparison of two or more year's financial data is known as horizontal analysis or trend analysis. Horizontal analysis is facilitated by showing changes between years in both dollar and…
Margin of Safety (MOS)
Learning Objectives: Define and explain margin of safety. Calculate margin of safety ratio in Percentage. What is its significance/importance? Calculation of merging of safety in cost volume profit analysis Contents: Definition…
Three Column Cash Book
Three Column Cash Book: Learning Objectives: Define and explain a three column cash book/treble column cash book. Prepare a three column cash book. What is the difference between a single…
Revenue Expenditures
Revenue Expenditures: Learning Objectives: Define and explain revenue expenditures. List of revenue expenditures. Definition and Explanation: Expenditures will be treated as revenue expenditures if it is incurred for the following purposes: Expenditure…
Petty Cash Book
Petty Cash Book: Learning Objectives: Define and explain petty cash book. What is the imprest system of petty cash? What are the advantages of Imprest system? Prepare a petty cash book. Definition and…
Price Earnings Ratio (PE Ratio)
Price Earnings Ratio (PE Ratio): Definition: Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation…