sidra Archive
Need for Depreciation: Learning Objectives: Why does the need for calculating and charging depreciation arise. The Need for depreciation arises for the following reasons: Ascertainment of True Profit or Loss: Depreciation is a loss. So Unless it is considered like all other expenses and
Nature of Accounts and Rules of Debit and Credit: Definition and Explanation: The term “account (a/c)” is a record in summarized and classified form of all business transactions that take place between particular person or persons thing or things specified. The principle benefit from
Avoidable Cost Definition: Any cost that can be eliminated (in whole or in part) by choosing one alternative over another in a decision-making situation. In managerial accounting, this term is synonymous with Relevant cost and differential cost.
Average Costing Method Versus FIFO Costing Method: Learning Objectives of this Article: What is the difference between average costing method and FIFO costing method when they are used in process costing system? What are advantages and disadvantages of Average and FIFO costing method? Both
Average Unit Cost Method–Allocating Joint Product Cost: Learning Objectives: Explain the use of average unit cost method in joint product cost allocation. Average unit cost method attempts to apportion total joint production cost to the various products on the basis of a predetermined standard
Average Costing Method–Materials and Inventory Costing: Learning Objectives: Define and explain average costing method. Give an example of Average costing method. What are advantages and disadvantages of average costing. Definition and Explanation of Average Costing Method Advantages of Average Costing Method Example Definition and
Average Collection Period Ratio: Definition: The Debtors/Receivable Turnover ratio when calculated in terms of days is known as Average Collection Period or Debtors Collection Period Ratio. The average collection period ratio represents the average number of days for which a firm has to wait
Assumptions of Cost-Volume-Profit (CVP) Analysis: Learning Objectives: What are underlying assumptions of cost volume profit (CVP) analysis? A number of assumptions underlie cost-volume-profit (CVP) analysis: These cost volume profit analysis assumptions are as follows: Selling price is constant. The price of a product or
Appraisal Cost Definition: Costs that are incurred to identify defective products before the products are shipped to customers.
Annuity Method of Depreciation: Learning Objectives: What is annuity method of depreciation? Where is it adopted? According to this method, the purchase of the asset concerned is considered an investment of capital, earning interest at certain rate. The cost of the asset and also
Allocation Base Definition Allocation base is a measure of activity such as direct labour-hours or machine-hours that is used to assign costs to cost objects.
American Institute of Certified Public Accountants (AICPA) Cost or Market Rules–Inventory Valuation The American Institute of Certified Public Accountants (AICPA) moved away from the traditional cost or market, whichever is lower principle of valuing inventories. After defining inventory and that the major objective of
After-Tax Cost definition The amount of net cash outflow resulting from a tax-deductible cash expense after income tax effects have been considered. The amount is determined by multiplying the tax-deductible cash expense by (1 – Tax rate).
After-Tax Benefit Definition The amount of net cash inflow realized from a taxable cash receipt after income tax effects have been considered. The amount is determined by multiplying the taxable cash receipt by (1 – Tax rate).
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Advantages of Variable or Direct or Marginal Costing System Learning Objectives: What are the advantages of variable costing system? Why absorption costing continues to be used almost exclusively for external reporting purposes? Variable costing has the following main advantages: The data that are required
Advantages of Ledger Learning Objectives: What are the main advantages of ledger? The following are the advantages derived from ledger: It is the ledger through which successful application of double entry system of bookkeeping is ensured. Each and every transaction is divided into two
Advantages of Bills of Exchange Learning Objective: What are the main advantages of bills of exchange? The following are the advantages of a bill of exchanges: It is a legal evidence of debt. It is a convenient method for the transfer of debt A