Abida Archive
Return on Investment (ROI) and Balanced Scorecard: Simply exhorting managers to increase return on investment (ROI) is not sufficient. Managers who are told to increase return on investment (ROI) will naturedly wonder how this is to be accomplished. Generally speaking, ROI can be increased
In real sense, ordinary shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed
Return on Capital Employed Ratio (ROCE Ratio): The prime objective of making investments in any business is to obtain satisfactory return on capital invested. Hence, the return on capital employed is used as a measure of success of a business in realizing this objective.
Return on Shareholders Investment or Net Worth Ratio: Definition: It is the ratio of net profit to share holder’s investment. It is the relationship between net profit (after interest and tax) and share holder’s/proprietor’s fund. This ratio establishes the profitability from the share holders’
Retiring of a Bill of Exchange: Learning Objectives: Make journal entries in the books of drawer and drawee when a bill of exchange is retired before it maturity. Definition and Explanation: Retiring a bill means making payment before the date of maturity. When the
Retainer Fee Approach Definition: A method of allocating service department costs in which other departments are charged a flat amount each period regardless of usage of the service involved.
Responsibility Center Definition: Any business segment whose manager has control over cost, revenue, or the use of investment funds.
Responsibility Accounting Definition: A system of accountability in which managers are held responsible for those items of revenue and cost – and only those items – over which the manager can exert significant control. The managers are held responsible for differences between budgeted and
Residual Income-A Method to Measure Managerial Performance: Definition and explanation of residual income method: Residual income is the net operating income that an investment center earns above the minimum required return on its operating assets. residual income vs roi is another approach to measuring an
Residual Income Definition: The net operating income that an investment center earns above the required return on its operating assets.
Requirements of a System of Materials Control: The important requirements or essentials of adequate satisfactory system of materials control are as follows: Proper Coordination Competent Purchasing Agent Use of Standard Forms Control by Budgeting Materials and Equipment Storage Location Operation of Perpetual Inventory Standards
Required Rate of Return Definition: The minimum rate of return that an investment project must yield to be acceptable.
Replacement Cost Method Definition: Replacement cost is the cost at which, on the date of issue of the material, there could be purchased another lot of material identical to that whose issue is being priced. Under replacement cost method, the issues are priced at
Learning Objectives: Define and explain replacement cost method. What is the use of replacement cost method while cost by-products? Replacement cost method ordinarily is applied by firms whose by-products are used within the plant, thereby avoiding the necessity of purchasing materials and supplies from
Re-order Level or Ordering Point or Ordering Level: Definition and explanation of re-order point Formula of re-order level or ordering point Examples Definition and explanation: This is that level of materials at which a new order for supply of materials is to be placed.
Renewal of a Bill of Exchange: Learning Objectives: Make journal entries in the books of drawer and acceptor when the original bill is cancelled and a new bill is drawn on the acceptor. When the acceptor of a bill finds himself unable to make
Relevant Cost Definition: A cost that differs between alternatives in a particular decision. In managerial accounting, this term is synonymous with avoidable cost and differential cost.
Relevant Range Definition: The range of activity within which assumptions about variable and fixed cost behavior are valid.