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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 improvements can be identified and collective efforts of the organization can be channelized for
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 accounting software but we can provide you the facts and list of top accounting
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 percentage form as has been done in the example below. Showing changes in dollar
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 of Margin of Safety (MOS) Formula of MOS Example Review Problem Definition and Explanation:
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 column cash book, a double column cash book and a three column cash book?
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 for purchasing floating assets i.e., assets meant for resale at a profit or for being converted
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 Explanation: In almost all businesses, it is found necessary to keep small sums of
Learning Objectives: Define and explain contribution margin ratio. Calculate CM ratio. What is the importance and benefit of calculating CM ratio? Contribution margin percentage or average Definition of Contribution Margin Ratio Formula Calculation Importance Review Problems Contribution Margin Ratio Calculator Definition of Contribution Margin Ratio: The contribution margin as a percentage of total
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 in the value of a share of a company and is widely used by
Definition of gross profit ratio: Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales. Components: The basic components for the calculation of gross profit ratio are gross profit and net sales.Net sales means that sales minus sales returns. Gross profit would be the difference betweennet sales and cost of
Gross Profit Analysis (GP Analysis): After studying this chapter you should be able to: Gross profit is the difference between the cost of goods sold and sales. Since the adherence of the actual to the budgeted or standard gross profit figure is highly desirable, a careful analysis of unexpected
Liquid or Liquidity Ratio / Acid Test or Quick Ratio: Definition: Liquid ratio is also termed as “Liquidity Ratio“, “Acid Test Ratio” or “Quick Ratio“. It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm
Definition of net profit ratio: Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage. Components of net profit ratio: The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained
Double Declining Balance Method of Depreciation: Learning Objectives: Define and explain the double declining balance method of depreciation. What is double declining balance formula and and also provide example. Double declining balance method is another type of accelerated depreciation method followed generally in USA. The depreciation expense is computed by
Learning Objective of the article: Define and explain production budget. Prepare a production budget.(Formula and format) Definition and Explanation of Production Budget: The production budget is prepared after the sales budget. The production budget(budget de production) lists the number of units that must be produced during each budget period to
Sales Budget: Learning Objectives: Define and explain sales budget. Give and example of sales budget. Contents: Definition and explanation of sales budget Example Definition and Explanation: A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units
Master Budget: Learning Objective of the Article: Define and explain the term “master budget”. What are the parts / components of master budget? What are its advantages and disadvantages? Give example of master budget. Definition and Explanation: The master budget is a summary of company’s plans that sets specific targets for
Absorption Costing Approach to Pricing: Learning Objective of the Article: Compute the selling price of a product using the absorption costing approach. What are the advantages or benefits, disadvantages/limitations of absorption costing approach The absorption costing approach to cost plus pricing differs from the
